As Sensex tops 70,000 long-term momentum intact, but some profit booking possible

The 30-pack Sensex scaled the 70,000-mark for the first time on December 11, within days of the broader Nifty hitting 21,000 as the bull run continues. Analysts believe the current undertone of markets remain bullish in the near-term, despite minor profit-booking anticipated on the counter as most indices trade at record high levels.

“Some profit-booking might get in as markets trade at record high levels. But, if one asks whether investors will take cash away from the markets immediately, the answer is NO. India has plenty of catch-up to fill in the shoes of China. If foreign investors can pour around $4 trillion into China in just five years, India at $6 billion is too less. There is plenty of headroom here,” said Deven Choksey, MD, KR Choksey Holdings.

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Gaurang Shah, Vice-President at Geojit Financial Services also shared bullish sentiments around markets long-term growth trajectory.

“Despite OPEC+ announcing voluntary production cuts, crude oil continues to remain at easing levels. We expect the market momentum to be strong in the long-term as commentary from the Reserve Bank of India (RBI) has been positive in its latest monetary policy meeting. Foreign flows, too, are sustainable for Indian equity markets as macros are on a strong footing,” Shah added.

Since FIIs tend to turn away from investing ahead of Thanksgiving or holiday season, will it impact the Indian equities? Gaurang Shah of Geojit Financial asserted that even if there is certain hiccup, strong buying from domestic institutional investors (DIIs) will keep markets positive momentum intact in the near-term.

So far this month, foreign institutional investors (FIIs) have bought Indian equities worth Rs 26,505.29 crore, riding on hopes of interest rates peaking out, retreating US treasury yields, and sluggish dollar moves.

On December 11 morning trade, the S&P BSE Sensex climbed 0.3 percent to hit record high of 70,048 levels, while Nifty50 was up 0.2 percent to hit a high of 21,019 levels.

It has taken benchmark Sensex around 549 sessions to move from 60,000 levels to 70,000-mark, whereas around 111 trading sessions to move from 65,000 levels.

Valuation-wise, India is trading at premium valuations compared to emerging market (EM) peers, said analysts. However, they added that valuations are justified in terms of anticipated growth and projected economic indicators.

“India’s valuations is expensive compared to EM peers but it is justified on the grounds of doubling growth and strong macros,” added Choksey of KRChoksey Holdings.

From an investment standpoint, Choksey added that largecaps are trading at attractive valuations, while some caution should be warranted over mid-and smallcap pockets.

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