The rally is not over and investors should maintain their long positions on the Nifty as the rally is likely to stretch towards 11000 ahead of the Budget
Surprised, why markets seem to be climbing all wall of worries and manage to hit record highs. Well, analysts tracking D-Street say that we are in the midst of a pre-budget rally which could stretch towards 10,900 by Budget Day.
The Budget session will start from January 29 and the final Budget will be president by the finance minister on February 1, Thursday.
After closing on a strong note, Nifty continued its winning run in the first month of the year 2018 where as many as 23 stocks in the S&P BSE 500 index rose 20-49 percent in just two weeks or roughly 10 trading sessions.
Stocks which rallied up to 49 percent include names like Phillips Carbon Black which rose 49 percent, followed by EIH which gained 32 percent, and Aban Offshore rallied 29 percent in the last two weeks.
Bulls dominated the S&P BSE 500 index as only one-third of stocks in the index gave negative returns while the rest closed in green as of data collected on 12 January (2 weeks). Plenty of action was seen in the small and midcap stocks which saw huge buying interest from domestic investors.
The total money garnered by fund houses through SIPs increased to over Rs 59,000 crore in 2017 as compared to about Rs 40,000 crore in 2016, Association of Mutual Funds in India (Amfi) data showed.
The rally is not over and investors should maintain their long positions on the Nifty as the rally is likely to stretch towards 11000 ahead of the Budget, suggest experts.
Yes, we are living the pre-budget rally. The Nifty was in a pattern of a wedge and the current up-move is the final leg of it. The Nifty is not over-heated yet and there still exists room for 11,000-11,200 before we witness a halt.
Smart money knew this and that’s what the Open Interest data has been suggesting for a long time. Option writers were placed at and above 11000 to keep enough safety pre-event.
Most of the negatives are quickly bought into by the bulls which suggest that this bulls market has legs to move further into uncharted territory. On Friday, the Nifty did succumb under profit booking pressure after a press conference was carried out by the Judges of the Supreme Court.
Investors have nothing to fear about the structural Bull Run seen on D-Street; however, if the political crisis out further there could be some knee-jerk reaction.
Despite the challenges at micro as well as macro levels, bulls have continued their momentum. Budget is expected to be rural heavy and populist and we can see the market is already aligning towards such theme.
Given that, this is going to be the last budget of present Government, a lot of hopes are gathering pre-budget and that is being reflected in the stock prices. Hopefully, the market should settle at these levels between 10600 and 10900 pre-budget.
Global Rally driving gains on D-Street:
The secular trend that we are witnessing is very Global in nature. Most of the Major Indices are trading at all-time high driven by High Liquidity. Currently, Budget is what is driving the trajectory of the market upwards.
We are expecting a good and populist budget considering politically that we have Eight States to go for Election and then the Lok Sabha Election in FY-19. This pre-Budget Rally is well augmented by Global Liquidity.
“We can see the pre-budget meetings going on with all industries and Panels formed by the government. The sentiments on Indian markets are very positive. Technical studies suggest we are targeting 11500 levels. Minor corrections are still an opportunity to Buy,” he said.
Commenting on the Budget, Nadeem expects that LTCG might be taken care by Government since benefits of Zero rate are far more than that of Taxing investors. Additionally, FM could consider, an increase in Disinvestments targets to offset any major Tax cut in the coming budget.
MORE WILL UPDATE SOON!!
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