Nifty above 22,900: What next for the index as poll results approach? Experts advise what investors should do now

nifty above 22,900: what next for the index as poll results approach? experts advise what investors should do now

Nifty reclaimed record high, gaining over 1.5%.

Indian benchmark indices ended at record closing highs on Thursday with both the benchmarks Sensex and Nifty surging over 1.6 percent each. Both the benchmarks crossed significant levels in intra-day deals today. Sensex almost hit the 75,500 mark while Nifty crossed the 22,900 mark.

The surge comes after the Reserve Bank of India (RBI) announced a substantial ₹2.1 lakh crore dividend to the government. This development is a significant macroeconomic positive for the market, with direct implications for the fiscal deficit and bond yields.

"The infusion of funds is akin to an indirect rate cut for the economy, as it is expected to lead to a reduction in bond yields. Since many investment instruments are linked to government bond yields, this reduction will likely have a broad positive impact across the financial markets. The improved fiscal position could also prompt upgrades in India's economic outlook," said Santosh Meena, Head of Research at Swastika Investmart Ltd.

Read here: Record high! These 5 heavyweights contributed over 50% to Sensex's 1,115-point run

S&P BSE Sensex ended 1,197 or 1.61 percent higher at 75,418.04. In intra-day deals, the index hit a record high of 75,499.91, up 1,279 points from yesterday's close.

Meanwhile, the broader Nifty surged 370 points or 1.64 percent higher to end at 22,967.65. It also hit a new high of 22,993.60 in intra-day deals, up 396 points from its previous close.

Apart from the RBI's record dividend payout, a surge in heavyweights, especially banks, better-than-expected Q4 earnings, increased certainty surrounding the election outcome, fall in crude oil prices, strong domestic investor buying and reduced foreign investor selling in the last few days also aided the sentiment.

Read here: Why did the Indian stock market rise today?- explained with 5 key factors

"Market sentiment, particularly in the banking sector, improved substantially following the Reserve Bank of India's announcement of a ₹2.11 lakh crore dividend payout to the government for FY24, which exceeded market expectations. This dividend payout is expected to help the government reduce its fiscal deficit and increase capital expenditure. Additionally, the continuous decline in crude oil prices, which fell by nearly 4 percent this week, has raised expectations of a reduction in the U.S. inflation figures. This potential mitigation of inflation could prompt the U.S. monetary authorities to lower the key benchmark rate sooner than anticipated," explained Vishnu Kant Upadhyay, Assistant Vice President - Research and Advisory, Master Capital Services.

Stocks and sectors

On the BSE Sensex, only three stocks—Sun Pharma, Power Grid Corp., and NTPC—closed in the red. The top gainers were Mahindra & Mahindra, Larsen & Toubro, Axis Bank, Maruti Suzuki India, and UltraTech Cement. On the Nifty 50, only six stocks—Sun Pharma, Power Grid Corp., Hindalco Industries, Coal India, NTPC, and Tata Consumer Products—closed in the red. The top gainers included Adani Enterprise, Adani Ports & SEZ, Maruti Suzuki India, Eicher Motors, and Axis Bank.

Read here: Market Close Highlights: Sensex, Nifty close at record highs

Apart from the Healthcare and Pharma indices, which fell by 0.79% and 0.52% respectively, all other sectoral indices closed in the green. The Bank and Auto indices rallied more than 2%, while Financial Services, IT, Realty, Consumer Durables, and Oil & Gas indices climbed over 1%. The FMCG, Media, and Metal indices also closed positively.

What should investors do now?

With Nifty already crossing 22,900 today, some experts believe favorable election outcomes with positive macros can lead to Nifty hitting the 24,000 mark.

Santosh Meena, Head of Research at Swastika Investmart Ltd

In the current market scenario, Foreign Institutional Investors (FIIs) have been net short, but the market is experiencing a short-covering rally that appears to have further momentum. Despite continuous selling by FIIs in the cash market, there is now an anticipation that they may shift to buying, which would provide additional support to the market.

Looking ahead, the Nifty index may witness further expansion. An immediate target of 23,000 is in sight, with the possibility of reaching 24,000 as the election outcome approaches. However, while large-cap stocks are expected to perform well, mid-cap and small-cap stocks may underperform from this point forward.

Read here: Lok Sabha Election: Nifty may see a rally to 23,000, but can that last longer?

Ajit Mishra – SVP, Research, Religare Broking

The session turned out to be highly favorable for participants as the Nifty reclaimed its record high, gaining over one and a half percent. After a flat start, the Nifty steadily climbed throughout the day, inching closer to the significant 23,000 mark, primarily driven by substantial buying in select heavyweight stocks.

We anticipate the prevailing positive trend to continue, with the alignment of the banking index potentially adding further momentum. We are now targeting the 23,100-23,400 zone for the Nifty, with the 22,600-22,800 zone expected to provide support in case of any pullback. Investors should focus more on heavyweight stocks and remain selective in the mid-cap and small-cap segments.

Vinit Bolinjkar, Head of Research, Ventura Securities

The market remains buoyant as election-related uncertainties dissipate. Anticipation of political stability following the Lok Sabha elections has investors concentrating on quality stock acquisitions, given the favorable medium-to long-term market outlook.

Investor sentiment has further strengthened following the Reserve Bank of India's announcement of a record ₹2.11 lakh crore dividend to the Centre for FY24, positively impacting the economy by aiding the government in achieving its fiscal deficit target for FY25. Despite a sell-off by foreign institutional investors this month, domestic institutional investors have demonstrated robust buying activity. Data reveals that DIIs acquired Indian stocks worth ₹38,331 crore in the cash segment up to May 22, while FIIs divested ₹38,186 crore in the same period.

Read here: Jio Financial to seek shareholder nod for foreign investments via equity

Hitesh Jain, Strategist, YES Securities India Ltd

Buoyancy in Indian equities is based on the expectation of policy continuity and the Modi 3 regime, which is being front-loaded in many stocks. Supply of bigger IPOs has also contributed significantly to the market cap.

Markets have rallied broadly during this journey. Midcaps and smallcaps relatively have performed better. We don’t see a challenge in valuation terms as PE multiple for mid-cap and small-cap stocks are near the 5-year average. Earnings have improved broad-based as the number of companies reporting loss has shrunk drastically.

Technical view

Soni Patnaik, Assistant Vice President, Equity Derivatives Research, JM Financial Services

A 1,000-point rally from 21,800 levels as shorts get squeezed out of the system as FIIs positioning in long:short ratio bounces from 26% longs. Nifty futures witnessed 2.5% fresh longs on an intraday basis today till now. Nifty manages to cross crucial resistance of 22,800+ levels at the back of weekly expiry today and can head towards the 23,000 mark by the month-end expiry from current levels. Aggressive put options writing can be seen from the base of 22,500 PE to all the way till 22,800 PE forming a strong support base at 22,600/22,700 levels now.

Bank Nifty, on the other hand, sees unwinding as FIIs sold approximately ₹1,279 crore yesterday, thereby, slightly underperforming. Crucial resistance for Bank Nifty continues to be at its previous ATH of 49,000+ levels beyond which Bank Nifty can see levels of 49,500+ levels.

Read here: Adani Enterprises likely to replace Wipro on BSE Sensex

Gaurav Bissa, VP, InCred Equities

The Nifty index has made a fresh swing high and witnessed a fresh breakout on daily charts. RSI is trading above 60 which is likely to keep the momentum intact. A close above 22,800 will pave the way for 23,500 levels.

  

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.

OTHER NEWS

2 hrs ago

Hyundai IPO to shatter all records? India’s 2nd largest car maker plans Rs 25,000 cr issue

2 hrs ago

Mcap of Five of Top-10 Most Valued Firms Jumps Rs 85,582 Crore; LIC Biggest Gainer

2 hrs ago

Dividend Stocks June 2024: Tata Steel, L&T, HDFC AMC among stocks to trade ex-dividend next week – Full List

2 hrs ago

Minimalist designs and multifunctional furniture are the latest trends: Gauri Khan

2 hrs ago

UK elections: Polls predict 'electoral extinction' for PM Sunak's Conservatives

2 hrs ago

Punjabi NRI thrashed in Himachal over parking dispute, political leaders alleges link with Kangana Ranaut slap case

2 hrs ago

The Great Indian Kapil Show: Here's why Archana Puran Singh's kursi is in danger; says 'Mirchi laag gayi. Abhi mera agla season khatrein main hain'

2 hrs ago

Dharmendra Pradhan on NEET Row: NTA officials won't be spared if found guilty

2 hrs ago

Neetu Kapoor wishes son Ranbir Kapor and late husband Rishi Kapoor on Father's Day

3 hrs ago

'Waqar, Wasim Left a Legacy Behind but This Team...': Ex-IND Star Feels Pakistan 'Didn't Deserve' a Super 8 Berth

3 hrs ago

Chennaiyin FC sign experienced Indian defender Mandar Rao Dessai

3 hrs ago

Australia tie with England, India for most successive wins in T20 World Cup

3 hrs ago

BAN vs NEP 2024, T20 World Cup 2024 Live Streaming: When and where to watch Bangladesh vs Nepal live?

3 hrs ago

HCL Tech 2025 Dividend News: Record date fixed by IT stock

3 hrs ago

Airfares likely to taper off from July due to capacity addition, slight fall in demand

3 hrs ago

No land to Adani group in Dharavi project

3 hrs ago

Lok Sabha Speaker election: Sanjay Raut offers INDIA bloc support to TDP; JD(U) backs 'BJP's right'

3 hrs ago

'Can't Give Excuse that You Don't Have Money for Covers': Gavaskar Lambasts ICC for Poor Resources in Florida

3 hrs ago

Nod to Prosecute Arundhati Roy Under UAPA 'Misuse of Power': Sharad Pawar

3 hrs ago

TVF Founder Arunabh Kumar and Director Deepak Kumar Mishra Celebrate the Success of 'Panchayat Season 3' with Cast and Crew

3 hrs ago

30 Trapped Dangling Upside Down From Amusement Park Ride For Half An Hour In US’ Oregon, Rescued

3 hrs ago

IndiGo introduces direct flights connecting Durgapur to Bhubaneswar, Bagdogra and Guwahati

3 hrs ago

US Open Golf: Bryson DeChambeau leads by three strokes after birdie spree

3 hrs ago

With power to YSRCP ceiling fan switched off, hot days beckon Jagan

3 hrs ago

Gautam Gambhir all set to take charge as India's head coach as BCCI allows him to choose his own support staff: Report

3 hrs ago

Namibia all-rounder David Weise announces retirement from International cricket after England clash in T20 WC

3 hrs ago

Jaiswal gets nod to open batting from Vaughan in T20 World Cup Super 8: 'Virat or Rohit, doesn't matter to me...'

3 hrs ago

Delhi: Night temperature still in the 30s, respite likely on Wednesday

3 hrs ago

T20 WC: Batter Jonny Bairstow believes England players 'were relaxed' against Namibia

3 hrs ago

Dividend Alert! Tata Investment, HDFC AMC among stocks to trade ex-dividend on June 18 – Full List

3 hrs ago

SBI Increases MCLR; Loan Rates To Go Up? Read How It Affects Loan Borrowers

3 hrs ago

Elon Musk vs ex-Union Minister over EVMs, Rahul Gandhi jumps in too

3 hrs ago

Lucknow Man on Ventilator Marries Daughters in ICU

3 hrs ago

Revised NCERT textbook mentions Babri Masjid as ‘three-domed structure’, shortens Ayodhya section from four two pages – Key changes listed here

3 hrs ago

The Fall Guy Review: Ryan Gosling, Emily Blunt Are At Their Goofy Best In This Exhilarating, Meta Stuntman Comedy

3 hrs ago

Modi’s foreign policy stamp

3 hrs ago

Anant Ambani-Radhika Merchant pre-wedding bash: From luxury cruise in Italy to concert in Cannes- a look at grand affair

3 hrs ago

'It will make jobs…': Bill Gates' message on AI to IT professionals

3 hrs ago

Tainted leaders affecting BJP, ‘foreign powers’, Thrissur win — Hindu Right Press on poll results

3 hrs ago

How PCB sabotaged Pakistan's T20 World Cup 2024 campaign