Market indices continue rising, but risks remain

NEW DELHI:  The Reserve Bank’s revision of India’s GDP target for the current fiscal year and its decision to keep interest rates steady and ‘accommodative’ has been widely welcomed by equity traders. The benchmark Sensex index has consequently topped the 45,000 point-mark for the first time while the Nifty50 reached a fresh high of 13,280 on the last session of the week.

The Sensex rose 2.1 per cent and the Nifty50 2.2 per cent over the week. However, analysts also warn there are risks to the markets’ onward rise and investors will need to be cautious of hurdles. Shrikant Chouhan, executive vice president, Equity Technical Research, Kotak Securities said, “This week, Nifty 50 index would face major hurdle at 13350/13400 levels, which is nearby.

However, the Bank Nifty should outperform and move to 31,000 levels without any major efforts. The strategy should be to buy on dips with a final stop loss of Nifty 50 index at 13,100.”Experts feel multiple factors, ranging from the Supreme Court verdict on the loan moratorium to developments on the Covid-19 vaccine front, will play major role in deciding which way the market would move this week. 

Siddhartha Khemka, Head - Retail Research, Motilal Oswal Financial Services said that the overall structure of the market continues to remain positive due to consistent FII inflows, the optimistic RBI policy outcome, and developments on the vaccine front. Investors are also likely to track progress on the US stimulus programme, which is gaining momentum again.

The European Central Bank’s interest rate decision this week would also be kept on the radar, Khemka added. Vinod Nair, Head of Research at Geojit Financial Services said that the banking sector is likely to continue to stay in focus in the coming week due to the expected SC verdict on the moratorium. “In the near-term, we feel that PSU Banks can outperform as price and valuation wise they are still much cheaper than private banks and they have not yet participated in the rally in the market and banking industry,” he said.