Sensex hits another milestone. But investors should remain cautious, say experts

Indian markets jumped to a record high today, in line with gains in peers in Asia, as investors remained optimistic about a US stimulus deal and covid vaccine. Heavyweights Reliance Industries and HDFC Bank led the gains. The NSE Nifty 50 index ended 1.02% higher at 13,529, its seventh consecutive session of gains, while the benchmark S&P BSE Sensex was up 1.09% at 46,103. Both the indices are up more than 4% so far in December.

India’s largest company by market value Reliance Industries Ltd rose 1.7% to its highest since mid-November, while private-sector lender HDFC Bank Ltd gained 2.3%.

“Nifty continues its upward climb with little signs of a reversal soon. In fact today’s rise has come with an upgap between 13435-13449. It will be interesting to watch as to whether this upgap is filled soon or whether today’s gap is an exhaustion gap which indicates that we are close to a top,” says Deepak Jasani – Head, Retail Research, HDFC Securities

The broader indices too showed decent traction and gained in the range of 0.4-0.5%. Among the sectoral indices, banking and energy were among the top contributors.

Here is what analysts said on today’s market rally:

Sameet Chavan, Chief Analyst-Technical and Derivatives, Angel Broking

“Our markets reached yet another milestone of 13500 with ease and banking as well as Reliance were the major charioteer of the move today. Since we are in an uncharted territory, sky’s the limit for our market; but in our sense, we have now reached the extreme most zone, at least for the current vertical move. With a broader view, 14000 and beyond levels are very much possible, but for a time being, 13500 – 13600 are the extreme levels as per few Fibonacci ratios. Let’s see why these levels are considered important. The ‘Golden Ratio’ (161%) of the ‘Price Extension’ of the previous up move is placed at current levels. This level coincides with the ‘Multi-year Upward Sloping Trend Line’, drawn by connecting all important highs from March 2015 on the monthly chart. Hence, some profit booking around these levels cannot be ruled out.”

Ajit Mishra, VP – Research, Religare Broking Ltd

“Markets are largely mirroring global cues but the benchmark looks slightly overbought so the possibility of consolidation in the near term cannot be ruled out and it would be healthy for markets. We thus recommend booking partial profit in the existing trades and keep trailing stop losses on every rise. For fresh buying, investors should maintain extra caution on the selection of stocks and maintain “buy on dips” approach.”

Manish Hathiramani, Proprietary Index Trader and Technical Analyst, Deen Dayal Investments

“We closed very close to the day’s high which is a good sign. The Nifty has a strong bullish undercurrent and every dip can be looked at as a buying opportunity. However, traders should be cautious as we are in a range of resistance which is between 13400 and 13700. We are now closer to the upper end of this range. A strong support lies at 13100.”

Shrikant Chouhan, Executive Vice President, Equity Technical Research at Kotak Securities

“Technically, the Nifty has held a level of 13450 which is grossly positive – if the index trades above the same we can expect uptrend continuation wave up to 13600. Further uptrend may continue which could lift the index to 13665. However, on intraday time frame, the index is in an overbought zone and high chances of an immediate correction is not ruled out if index trades below 13450. Hence, dismissal of 13450 could possibly open correction wave up to 13400-13350. Banking and FMCG stocks will be on focus for next few trading sessions.”



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