Mumbai: India’s equity benchmarks notched new records on Wednesday with the Sensex closing above the 75,000-mark for the first time, continuing the bullish momentum. While the undertone remains bullish, analysts are advising caution in the near term as the market may have run up too soon.
NSE’s Nifty rose 111.05 points, or 0.49%, to close at 22,753.80. BSE’s Sensex gained 354.45 points, or 0.47%, to end at 75,038.15. Financial markets will remain shut on Thursday for Ramzan.
“We expect the Sensex and Nifty to gain another 3% before the election results, but it will not be a one-way move,” said Dharmesh Shah, head of technical research at ICICI Direct. “We can see some profit booking around the psychological level of 23,000 as the rally has been very fast.”
Shah has a target of 23,400 for the Nifty and 77,000 for the Sensex before elections in May.
The Sensex and Nifty have gained over 4% since March 19 – the start of the rebound following a bout of weakness in the preceding three weeks.
Analysts said the drop in the Volatility Index (or VIX) – a fear gauge- may be pointing to some complacency in the near term. The measure, which fell 2.18% to 11.11, has declined over 24% in 2024. When VIX falls, it’s an indication that traders do not see near-term risks in the market.
“We think the market has made a near top and in the coming days we may see a sharper than expected correction, especially a month before elections,” said Sanjiv Bhasin, director at IIFL Securities.
Analysts said Nifty could face hurdles at the psychologically crucial 23,000. “Technical indicators hint at a potential secondary trend, either a price or time-wise correction,” said Rajesh Bhosale, technical analyst at Angel One.
“The nature of the correction that unfolds will be pivotal. A price-based correction could trigger broad market profit-taking, whereas a time-wise correction might maintain the benchmark index within a range while individual stocks continue to outperform.”
On Wednesday, Nifty Midcap 150 gained almost 0.9% and Nifty Smallcap 250 rose 0.6% during the day. Out of the total 3,933 stocks traded on the BSE, 1,904 advanced and 1,939 declined.
Shah recommends investors buy on declines.
“Currently we are in a structured bull market where there could be short-lived corrections. Investors must use them as buying opportunities,” he said.
On Wednesday, Foreign portfolio Investors (FPIs) net bought shares worth ₹2,778 crore. Domestic institutions were also buyers to the tune of ₹163 crore.
Elsewhere in Asia, China declined 0.7%, South Korea declined 0.46% and Taiwan dropped 0.29%, whereas Hong Kong rose 2.1%.
