Nifty at 13,500 by Dec? Here’s why analysts are making such projections

It’s a bad idea to constantly look at the rear-view mirror in the stock market. But historical data for the past 20 years suggests whenever Nifty has climbed over 5 per cent in the first half of a calendar year, the market has delivered double-digit return in the second half.

For instance, the index advanced 6.73 per cent during the first half 2005, thereafter it climbed another 28 per cent between July and December, 2005. Likewise, in 2006 Nifty jumped 10 per cent in H1 and 27 per cent in H2. Similar trends were seen also in 2007, 2009, 2012 and 2017.

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This year, Nifty has jumped over 9 per cent on a year-to-date (YTD) basis till June 27, and analysts say the index can easily rally another 10 per cent till December 2019.

“The 13,500 level looks possible for Nifty by December 2019, given the likely big kick on the reforms front,” says AK Prabahkar, Head of Research, IDBI Capital Markets. That target indicates a 14 per cent rally from the current level of around 11,800.

Prabhakar is positive on sectors like power, hotels and consumption to lead this rally.

The Union Budget scheduled for July 5 and June quarter earnings will dictate the future course of action for the market. In the interim, volatility owing to key events would present good opportunity to build a long-term portfolio, say analysts.

ICICIdirect believes the price action since the exit poll of March-April general elections has been showing all the characteristics of a healthy consolidation between 11,600 and 12,000 levels, which augur well for the market, as it sets the stage to head towards the psychologically important 12,000 mark, leading to an acceleration in upward momentum towards 12,400 level in the coming months.

“We do not foresee Nifty going below its key support at 11,600. Investors should start accumulating quality midcap stocks in a staggered manner,” ICICdirect said.

On a year-to-date basis, more than 50 per cent of stocks in the Nifty500 pack eroded investors wealth till June 27. However, stocks like Aavas Financiers, DCM Shriram, Just Dial, Info Edge, SRF, Godrej Properties and Manappuram Finances have rallied 50-80 per cent during this period.

“There are stocks that have corrected by 30-40 per cent because of various issues and the next multibagger is going to come from among these companies. As and when some of the clouds lift over the economy and the stock market and liquidity and investor sentiment improve, there will be a strong case for a PE rerating,” Dipan Mehta, Founder Director, Elixir Equities, told ETNow.

With over 75 per cent drop, Reliance Communications, Reliance Power, Reliance Infra and Cox & Kings have been among the biggest losers in the Nifty500 pack, while Delta Corp, Rupa & Company, Glenmark Pharma, TV18 Broadcast, Sun Pharma Advanced Research, Yes Bank, Sterlite Technologies and Shipping Corporation of India have declined 30-40 per cent year to date.