Dalal Street on a high; experts now say Nifty50 likely to hit 8,200 soon

NEW DELHI: Domestic equity indices closed near their 2016 highs on Tuesday as they surged to erase the losses of the year. The BSE Sensex rose 328 points to 26,007, closing above the 26,000 mark for the first time since January 1. The 50-share Nifty50 closed at 7,962, up 108 points.

“It is indeed a bolt from the blue and just as all of us were kind of settling down for a dull day. From the way the market has moved up, it is very clear that a big chunk of new buying has entered the market and a lot of shorts have been squeezed out of play,” said Dr CK Narayan, Founder, Chart Advise.

Indeed the spike came out of the blue as market men were preparing for another listless day in the market ahead of the crucial April futures and options expiry.

But, experts believe this is not enough.

“The very fact that the market has maintained higher levels is indicative of the fact that either the buyer is still in there or shorts are still being squeezed; both of which will probably lead to higher prices,” CK Narayan said.

The Nifty50 and Sensex both brok above crucial technical resistance levels in the session. The Sensex closed above its 200-day moving average of 25,873, which is indicative of a bullish undertone. Nifty50, too, closed above its 200 DMA.

Manav Chopra, Monarch Networth Capital, agrees with Dr Narayan’s view. “Actually, looking at the overall scenario, it is very difficult to anticipate that we could see these levels on an intraday basis, but definitely we will be at much higher levels over the next couple of sessions,” he said.

“I think we should maintain an upside target of 8,200 for the near term, which would be achieved by next week,” he said.

Nifty50 is still trading below its 10-year average price-to-earnings multiple of 18 and Varun Goel, VP & Fund manager, PMS, Motilal Oswal AMC, believes that can ensure further upside for the benchmark in the coming 12 months.

“As of now, the market continues to trade at very reasonable valuations of around 15-16 times one-year forward earnings, and therefore, we believe there is enough upside for the market in the next 12 months,” he said.