Indian stock markets finished the week with strong gains, buoyed by a sharp upmove on Friday. Sensex on Friday finished 523 points higher at 34,731, posting weekly gains of over 2.8%. The broader NSE Nifty 50 index on Friday closed up 1.51% at 10,244, boosted by a sharp rise in Reliance Industries shares after the oil-to-telecoms conglomerate said it was net-debt free. Shares of Reliance Industries Ltd settled 6.25% higher on Friday, a record high.
Many analysts are hopeful that Indian markets may extend gains next week due to the gradual reopening of the economy but say that investors need to be watchful of geopolitical tensions and rising coronavirus cases.
"We feel the recent upmove indicates participations are hopeful of de-escalation of tension between India and China. Besides, the recent data of loan moratorium and gradual reopening of the economy have eased their concerns over the NPA crisis in the banking system. Going forward, in absence of any major event except the earnings season, the markets would continue to take cues from global markets. Further, developments on India-China feud at LAC would remain a key monitorable. Amid all, indications are in favour of further surge in the index so we advise aligning the positions accordingly," said Ajit Mishra, VP - Research, Religare Broking Ltd.
On Friday, financial stocks rallied, with the Nifty PSU Bank index tracking state-owned lenders closing 2.23% higher, while the Nifty Private Bank index settled up 1.45%.
Shrikant Chouhan of Kotak Securities says now the next level to watch out for is 10,350 or maybe even 10550.
Foreign portfolio investors were net buyers on Thursday and Friday and Rusmik Oza, head of fundamental Research at Kotak Securities, says if global markets don’t fall sharply in the next week then we can expect some positive flows from FPI side.
Manish Hathiramani of Deen Dayal Investments is hopeful of Nifty hitting 10300 and then 10500 next week.
Siddhartha Khemka, head of retail research at Motilal Oswal Financial Services, advises investors to look for buying opportunities on declines in market and focus more on stock specific action.
"Market ignored potential fallout of India-China tensions and rising number of virus infections and resumed cheering a gradual resumption in business activities and an earlier-than-expected normalization in certain consumption sectors. Going ahead, we expect the markets to remain volatile as investors would track global cues and development around geo-political tensions," he said.
Sanjeev Zarbade, VP PCG Research, Kotak Securities, remains cautious. "After the rally in current month, investors need to be cautious in the near-term and watch out for geopolitical developments between India and China on one hand and valuations on the other. Resurgence of covid cases and reports of a second wave of infections are potential risks for the markets," he said.