According to the nation’s biggest listed brokerage, India’s NSE Nifty 50 Index is awaited to regain its all-time high of around 12,400 by March as the V-shaped rally in stocks is likely to continue.
Analysts at ICICI Securities Ltd. (1) led by Dharmesh Shah wrote in a note to clients that they do not envisage any extensive shift in the current directional positive bias. Any correction should be used as an incremental opportunity to create a portfolio of standard stocks.
The benchmark indicator has bounced more than 50% from its March low but is still about 7% below its January record. The gauge’s 50-day moving average has risen above its 200-day moving average, establishing a golden cross pattern is a bullish sign for some investors.
A brokerage’s view is based on factors including factual data showing the Nifty reiterating declines of over 25% within one year three times over the past 12 years altogether.
ICICI Securities and Dharmesh Shah on Nifty
ICICI Securities cited a high correlation between the Nifty and developed market indexes like the S&P 500 Index, trading at its peak.
Dharmesh Shah, who sees support for the Nifty in the significant demand zone of 10,400 to 10,600, said that any correction should be used to accrue more shares. He also added that bank and consumer stocks are now likely to join the outperformance of software exporters, insurance, auto, chemical companies, and drug makers.
ICICI Securities is even more hopeful on smaller stocks. Some investors see a sign of overheating in retail investing as the indexes of small and mid-sized stocks have mounted more substantial recoveries from the pandemic selloff than larger peers. Despite such reviews, Shah argues that nearly 70% of Nifty 500 Index members trading above their 200-day moving averages point to the trend’s durability.
Shah said that they expect these indices to outperform benchmarks adequately. Therefore, investors should deploy every dip to amass quality mid-cap companies.