Indian stock markets extended gains to the third day today, with the Nifty reclaiming the important level of 11,000. The broader markets also showed strong momentum with midcap and smallcap stocks posting gains. The participation of smallcap and midcap stocks in the current leg of the market rally has made analysts optimistic about markets extending their gains further.

“Momentum in the broader markets has have picked up with action seen in midcap and smallcap stocks. After a long period of consolidation, across the board participation is seen," says Sahaj Agrawal, deputy vice president for derivatives at Kotak Securities.

“We remain positive on the markets and expect the Nifty to conquer 11,300 going ahead," he says.

Agrawal of Kotak Securities expects banking, IT and cement stocks to extend gains further. He also remains positive on metal and auto stocks. “Metal and auto stocks are in consolidation mode with buying advisable on dips," he adds.

Sameet Chavan, chief analyst for technical and derivatives at Angel Broking, says a move towards 11,300–11,350 cannot be ruled out in days to come.

Many analysts have turned positive on midcap stocks after their protracted underperformance over a long period. “Despite mixed global cues, Indian bourses continued their momentum going throughout the day. The broader indices have been strong this week as the correction in smallcap and midcap stocks is way overdone, hence, serious buying is emerging in these counters," says Umesh Mehta, head of research at Samco Securities.

Elara Capital also remains positive on midcap stocks. "The relative valuation of midcaps vs largecaps is at a historically low level. We believe valuations are compelling at these levels for a revival in performance of midcaps, particularly the quality midcaps, which have also taken a substantial beating," the brokerage said in a note.

Jayant Manglik, president of retail distribution at Religare Broking, expects the markets to witness some consolidation at higher levels. “Considering a sharp upmove over the last few sessions, some consolidation at higher levels cannot be ruled out in the near term," he says.

“Domestically, macro data like industrial production and inflation scheduled next week will dictate the market trend in the coming sessions. Further, the extent of geopolitical risk between India and Pakistan will be closely monitored," he says.

On the global front, developments on the US-China trade front, progress on Brexit and movement of crude oil prices and currency would be on the market radar, he added. 

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