Indices Set For Rerating As Previous Peak Surpass Intra-day

Mumbai, October 31: The optimism in the stock market has begun to build up for the benchmark measures to scale new highs on the back of Bombay Stock Exchange (BSE)’s Sensex crossing its previous all-time high of 40,312 points during Thursday’s trading. It crossed previous peak of 40,312 points by another 80 points and traded at 40,392 but retreated later on the back of profit booking. Based on today’s performance of the BSE measures, marketmen have begun to rerate the Sensex and the Nifty’s new peak level for the next six months to one year period.

Amar Ambani, Head of Research, Institutional Equities – YES Securities said, “Our one-year target for Nifty is placed at 12,330. Our best-case target stands at 12,915 but with high chances of a steep fall, which may even pull back Nifty to sub-11000.”

Naveen Kulkarni, Head of Research, Reliance Securities said, “Corporate working numbers, we believe market will continue to trend upwards. we have a April 2020 Nifty target of 12,800."As no one is openly giving the forward target for the BSE benchmark, it is nor mally said that Sensex trades 3.2 times higher of the Nifty. So in case of Nifty scaling to the higher range of 12,800-12,915 points by December 2020, the Sensex will be traded in the range of 40,960-41,330 points. The Nifty is yet to catch up with the Sensex in terms of scaling new highs. Though the Sensex may have crossed its previous peak of 40,312points it attained on June 4, 2019, during the intra-day trade today, the broader Nifty is still trading 212 points lower and closed at 11,877 points on Thursday. It peaked to all time high level of 12,089 points on June 3, 2019 in a pre budget rally, post the installation of Modi 2.0 Government with much a much stronger mandate. The positions in the Futures & Options segment is also suggesting that rerating of indices is on the cards. Nifty closed with the gains of 2.65 per cent (cash market 3.86 per cent) on expiry to expiry basis, as it settled at 11,877 compared to September series closing of 11,571 marks.”

Even after the sharp cut in Infosys stock, Nifty has managed to hold its gains because of the Reliance, TCS, Hindustan Unilever, few Private sector Banks’ stocks and most of Auto stocks.

Chandan Taparia, Equity Derivatives & Technicals Analyst, Motilal Oswal Financial Services said, “Nifty index remained highly volatile in the October series as it moved in a wider range of 850 points. It fell down in the first week of the series but witnessed strong recovery from 11,090 to 11,945 zones in last four weeks by strong buying in many heavy-weights counters. It has been making higher highs - higher lows on weekly scale and managed to surpass its key hurdle of 11,700 zones”.

“Nifty Index has shifted its support to higher zones and now till it holds above 11,700 zones, we are expecting it to head towards its life time high of 12,103 marks. On the option front, as per the early data, maximum Put OI is at 11,600 while meaning Call open interest (OI) is at 12,000 strike. Option band signifies an immediate trading range in between 11,600 to 12,000-12,100 zones”, Taparia said.