Nifty sets eyes on 22,300, Bank Nifty must top 48,400 for further rally

Domestic markets ended higher on January 15 after benchmarks the Sensex and the Nifty scaled new highs of 73,322 and 22,104 towards close, supported by a rally in IT stocks after the December quarter results came higher than Street’s estimates.

Analysts expects the Nifty at 22,300 over in the next few sessions as the earnings season enters the second week.

At close, the Sensex was up 1 percent at 73,327 and Nifty climbed 0.9 percent to 22,097.

IT players Wipro, HCLTech, Infosys, and Tech Mahindra were top Sensex gainers, while Bajaj Twins, Larsen & Toubro and Asian Paints were the biggest losers.

“We see an ensuing uptrend for Nifty towards 22,300 in coming weeks, as it is price parity of March-July 2023 rally (16,828-19,991) projected from October 2023 low of 18,838,” said analysts at ICICI Securities.

They, however, warned that bouts of volatility would prevail but should not construed as negative. Investors should focus on constructing quality stocks portfolio, they said.

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Vaishali Parekh, Vice President-Technical Research at Prabhudas Lilladher, see Nifty moving to 22,300 with frontline stocks participating heavily, thereby indicating positive bias and momentum.

So far, this year, foreign institutional investors (FIIs) have favoured Indian markets as they poured over Rs 3,800 crore into equities.

Easing yields, weaker dollar and hopes of an easy monetary policy environment have seen FII betting on Indian shares.

At the macro level, India’s retail inflation surged to a four-month high of 5.7 percent in December but remained within Reserve Bank of India’s tolerance band of 2-6 percent.

Wholesale price inflation, however, jumped to a 9-month high of 0.7 percent in December.

ALSO READ: India’s wholesale inflation rises to 9-month high of 0.73% in December

Sectorally, the Nifty IT index was the lead performer after Q3 scorecard reflected less worries than what the Street was expecting for the sector grappling with a demand slow down . HCLTech’s Q3 result has been the best among tier-1 IT firms.

But will the gains in technology stocks sustain? Jay Patel, Research Head at InvestMentor Securities, thinks so.

The Nifty IT index has broken out after three-four weeks of consolidation. “While the Street was estimating bad Q3 results for the IT pack, they delivered on a flattish note. This good news will bring another 1,000 points rally over the near term,” he told Moneycontrol.

Joining IT were pharma and oil & gas stocks, while Nifty media and metal were the worst hit, slipping slipped up to a percent.

Bank Nifty saw some action after consolidating in the past week. It was up 0.9 percent at 48,158 on January 15.

The index would need a decisive go past 48,400 to confirm a breakout and for further upward move till 49,800, said Parekh.

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