Nifty50 headed for five-figure mark, may hit 12,000 in 2 years

After hitting a fresh all-time high of 9,532 on May 17, 2017, the Nifty50 is poised to hit a five-figure mark soon.

Laurence Balanco, Global Technical Analyst of CLSA, says the Nifty50 has formed a bullish chart and looks set to surpass the 10,000 mark.

After consolidating for roughly two years, the domestic equity indices broke out of trading range to hit new highs earlier this month. Since the beginning of this calendar year, the Nifty50 was at 9,438 as of May 22, up over 15 per cent from 8,179 as of January 2, 2017.

Both momentum and breadth indicators confirm those highs. “We have an initial target of around 10,300 by the end of the year, ultimately going up to the 12,000 mark in next 18 to 24 months,” Laurence Balanco said in an interview with ETNow.

He said in the short term there could be a pullback from the current level due to broad conditions. “We look at that as a buying opportunity as the market works towards those targets over the coming months,” said he.

The benchmark indices have not seen any meaningful correction since the middle of December 2016. Market experts say around 5-7 per cent of correction can be factored in any time.

The ongoing correction in the market can help investors accumulate fresh positions. Following a bout of profit booking, the 50-share index was trading below the 9,400 mark on Thursday.

Mahesh Patil, Co-CIO, Birla Sun Life Mutual Fund says some volatility has again come back on the commodities side, which has led to a minor correction.

“But there is nothing to worry about. Some of the stocks are coming down to good levels, and it is a good opportunity to deploy cash in this correction instead of chasing stocks when prices go up. One should always factor in a 5-7 per cent kind of correction at any point and that is what probably could set in,” said Patil.

Over the past few days, market sentiments have turned bullish again in anticipation of GST implementation from July 1 and a good monsoon ahead.

If you are looking for stocks to buy on correction, Vijay Singhania, Founder-Director, Trade Smart Online prescribes State Bank of India, IndianOil and UPL.

State Bank of India (SBI), the country’s largest lender, on Friday reported more than double profit for March quarter on the back of increased lending and reduction in provisioning for bad loans.

On standalone basis, net profit of the bank rose to Rs 2,814 crore in March quarter from Rs 1,263 crore reported for the same period of financial year 2015-16.

Sanjeev Zarbade, Vice President-PCG Research at Kotak Securities, said Engineers India, IRB and VRL Logistics can be good buys on correction.

“At this juncture, some profit-booking cannot be ruled out if the earnings come in below expectation or if there is a flare-up in geopolitical tensions,” Zarbade said.