Market Sets New Records

Mumbai, Apr 9: On Monday, the benchmark indices hit a new all-time high of 74869.30. While Sensex was up 494 points. Among sectors, Auto and Realty indices outperformed, with Auto gaining over 2 per cent and Realty gaining 1.70 per cent.

“Technically, Sensex crossed the 74650 resistance mark after a gap-up opening and accelerated positive momentum after the breakout. Higher bottom formations on the daily charts and breakout formations on the intraday charts indicate a further uptrend from the current levels,” says Shrikant Chouhan, Head Equity Research, Kotak Securities.

For trend-following traders, 74650 would act as a trend-deciding level. Above that the market can move towards 75500-75800. On the other hand, below 74650, the market may retest 74300-74200 levels. Take profit on long positions around 22900 levels.

Above 48650, it could move to 50000 with a minor resistance at 49400 levels. Buying the dips should be the strategy. Support exists at 48400 and 48200.

The pattern of ‘higher highs and higher lows’ is a distinct bullish signal and this has been the standout pattern in the Indian market this year. Consequently, the buy on dips strategy has consistently worked for investors.

“The new records set by the market yesterday confirms the bullish market undertone. A healthy and desirable trend in the market movement yesterday was the outperformance of the largecaps ,” says Dr. V K Vijayakumar, Chief Investment Strategist, Geojit Financial Services.

This trend is likely to continue. It is important to understand the fact that in this richly valued market there is valuation comfort in largecap banking stocks.

More importantly, Q4 results of the banking majors are likely to be very good. Sectors like capital goods, autos, cement and hospitality are likely to remain resilient.

“The hallmark of a bull market is its ability to set new record highs. This has been happening in the mother market US and also in the Indian market,” says Dr. V K Vijayakumar, Chief Investment Strategist, Geojit Financial Services.

An important feature of the recent rally in India is that it is led by fundamentally strong sectors like capital goods, automobiles, banking and metals.

The robustness of the Indian economy, the sustained capital flows into mutual funds and the enthusiasm of domestic investors can support the rally. However, valuations of the Smallcap segment are elevated and unjustified.