Sensex gains led by auto, realty stocks; Nifty may hit new all-time high if global markets keep steady

Benchmark indices Sensex and NSE Nifty 50 firmly held gains through the day on February 16 led by auto and realty stocks. Though analysts expect rally to extend further in the absence of any major triggers overseas, they caution investors against overstretched valuations.

Sensex and Nifty 50 gained 0.5 percent each to 72,426 and 22,020 on February 16 noon trade. Nifty is 106 points away from reclaiming its all-time high of 22,126. Broader markets outperformed benchmarks as Nifty Midcap 100 and Nifty Smallcap 100 indices surged up to 0.5 percent.

Ajit Mishra, Senior Vice-President of Technical Research at Religare Broking expects rally to extend in the absence of any major global market correction. "The next level for Nifty to eye for is 22,150, with a support of 21,750. If private banking majors continue to perform well, we expect overall market sentiment to remain buoyant," he added.

However, VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services warned against markets' rich valuations. "We do not see any fear in the markets and that is a concerning point. In case of any negative news, markets could be prone to a selloff," he added.

Analysts at Kotak Institutional Equities, too, found most sectors and stocks overvalued. "The market seems happy to overpay for weak business models in a few cases and unsustainably high profitability in others, which highlights high levels of exuberance (only greed) and low concerns about potential risks (no fear)," the brokerage firm wrote in a recent note.

Barring Nifty PSU Bank and Oil & Gas indices, all other sectors participated in the upsurge. Nifty Auto emerged as the top sectoral performer as it gained over 2 percent, followed by Nifty Realty, Pharma, and IT indices.

Cues for next week

Market participants will watch out readings from the FOMC minutes meeting to understand US Federal Reserve's rate cut path. According to CME Fed-watch tool, expectations for Fed to cut rate in March remained steady near 10 percent from 9 percent and prospects of rate cut in May stick to 34 percent against 35 percent a day ago.

Additionally, the Reserve Bank of India will also release minutes from its February meeting. Besides that, investors will eye deposit and credit growth rate of banks later in the week.

Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.