Indian Stock Market hits record high for second straight day. Where do experts see the indices
- Stock Market Today- Sensex and Nifty scaled record highs for second day in a row on Tuesday . Experts see more upside aided by expectations of political stability, strong domestic growth, favorable global cues with US federal reserve unlikely to resort to more rate hikes.
The market construct remains positive and the post state election rally continued for the second day on Tuesday with markets scaling new all-time highs. Adding to the gains on Monday Nifty and Sensex were trading with gains of more than 0.6%. Nifty scaled fresh highs of 20,826.95 while Sensex too saw fresh highs of 69,336.44.
On Monday Nifty 50 had closed at 20,686.80, up 419 points, or 2.07 per cent not before scaling all time highs of 20,702.65 while the Sensex had hit highs of 68,918.22 before closing with gains of 1,384 points, or 2.05 per cent, at 68,865.12.
The market momentum may remain positive for some time feel analysts. Renewed optimism of the Foreign portfolio investors (FPI) as they have turned net buyers remains supportive for the market while Domestic institutions already have remained a pillar of strength for the markets with regular investment flow continuing. Among other factors are strong domestic growth expectations, a rise in GST collections and corporate earnings growth remains supportive. The global cues for now also are turning favorable with declining US inflation, and expectations that US Federal Reserve may not hike rates further and may even resort to rate cuts by March 2024 are aiding investor confidence
Jitendra Gohil, Chief Investment Officer, Kotak Alternate Asset Managers Limted said, "Equity market is poised for further highs. The domestic and global macroeconomic environment remains highly supportive for Indian equities. The decisive verdict (state elections) could bolster investor confidence in Indian equities. Investors may extrapolate this resounding victory for the ruling government and assign a higher probability of a stable government at the centre in the upcoming general election in May 2024.
Political stability remains crucial for the country to attract long-term foreign capital, maintain financial stability and sustain current high valuations.
Gohil continue to remain constructive on Indian equities and believe the market is underestimating India's GDP growth.
Siddhartha Khemka, Head - Retail Research, Motilal Oswal Financial Services Ltd also expects market sentiment to strengthen further as the ongoing pre-election rally is quite strong now.
Motilal Oswal strategy report also suggest that with the outcome overwhelmingly in favor of the incumbent BJP, the confidence of the market in the current dispensation and political continuity post 2024 Lok Sabha elections will get a boost. This augurs well for macro and policy momentum for India, which, at the moment, is seeing the highest growth among major economies (both GDP as well as corporate earnings).
Nifty is trading at a 12-month forward Price to earnings ratio of 18.4 times, which is at a 9% discount versus its long-period average (LPA) as per Motilal Oswal Financial Services.
Among the key factors to influence the markets that have been highlighted by experts is the market valuations. Current Nifty valuations suggest that some more upside remains feasible for the markets before valuations turn expensive. Hence its not surprising that some experts remain positive and expect the markets to continue building on gains for some time.
The market has the potential to go up by another 5 % in the next many weeks. Beyond that valuations will get stretched inviting correction in the market," said Dr. V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services.
It is important to understand that FPIs have reversed their selling strategy and have been consistent buyers during the last 7 days. There is accumulation happening in the frontline banking stocks. This, along with short covering and reasonable valuations, will keep this segment strong, said Vijayakumar
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before taking any investment decisions
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