Index gains may be limited in stock market from hereon, caution analysts

Markets witnessed yet another cheerful week as the benchmark indices touched life-time highs. Key equity indices hit record highs on Friday with Sensex touching the 47,000 mark, but soon slipped into the red on profit booking. However, they erased all losses in the afternoon session to end with marginal gains. Sensex closed the week at 46,960.69, up 70 points, while Nifty 13,760.55, up 20 points.

The Nifty-50 Index has gained 1.8% this week while the Nifty-Mid Cap 100 Index and BSE Small Cap Index have gained 1.9% and 1.4%, respectively.

Analysts expect stock markets to turn volatile next week and consolidate. They caution traders of limited gains from hereon.

“The market remained buoyant on earlier-than-expected deployment of Covid-19 vaccines, impending US fiscal stimulus and decreasing domestic Covid-19 cases. FIIs flows though strong have moderated some bit from the previous week. The average daily FII flows in the first four days of the week was ~ 3,200 crore. Going forward expect FII flows to slowdown in the next two weeks as we head towards Christmas vacation. Markets could turn volatile next week due to the monthly expiry and lesser participation from FIIs. We expect Nifty-50 to consolidate between 13,000 & 14,000 levels till the end of this month,” says Rusmik Oza, Executive Vice President, Head of Fundamental Research at Kotak Securities.

Deepak Jasani, Head of Retail Research, HDFC Securities also caution investors.

He says, “Nifty ended up for the seventh consecutive week. However, the advance-decline ratio has deteriorated over the past two days. Hence now there seems to be a need for caution. Although some more upside cannot be ruled out, index gains may be limited from hereon.”

Two largest NBFCs, Bajaj Finance and HDFC Ltd, were the biggest gainers this week. Bajaj Finance is up 8.4% and HDFC Ltd. Is up 8.3% this week. Amongst the biggest losers, Maruti Suzuki Fell 2.3% and IndusInd Bank fell 2.1%.

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