The Nifty 50 index looks set to hit 12,000 in the May series if Narendra Modi gets second term as prime minister on 23rd May, according to a poll conducted by Moneycontrol that saw participation from 10 market analysts and brokerage firms.
Half of the analysts polled believed that the Nifty would touch the 12,000 mark if the Bharatiya Janata Party (BJP)-led National Democratic Alliance (NDA) manages a comfortable majority on 23 May as suggested by exit polls, while the rest said that investors should now brace for some profit-booking as markets have already rallied.
The Sensex was down nearly 380 points, or 1%, to 38,971 at 3:27pm on Tuesday, while the Nifty fell 120 points, or 1%, to 11,708.
“If the Nifty crosses the previous peak of 11,856, then we can expect it to rise further and test the 12,000 before 23 May. For Nifty to cross 12,000, a strong single-party majority for the BJP is required,” said Rusmik Oza, Head of Fundamental Research, Kotak Securities Ltd.
A few poll participants said that most of the impact of election results is already priced in and a correction can now be under way.
“If the prediction of the exit polls turn out to be true and the NDA gets a clear majority, the markets might see new all-time highs once again. That would be the best time to start booking profits on your longs while waiting for the right time to re-enter on dips,” Amit Gupta, co-founder and CEO, TradingBells, told Moneycontrol.
However, analysts gave mixed responses when asked about which segment will lead the rally.
“Economy is in a state of flux with liquidity being tight and presence of considerable pressure on NBFC, housing, power generation and telecom sectors. We believe that real pain in the economy will take time to subside and the market may remain skewed in favour of largecaps. We would advise being extremely selective in smallcaps at this point of time,” said Sandip Raichura, CEO (retail and distribution), Prabhudas Lilladher.
However, Oza of Kotak Securities said: “If BJP-led coalition comes back to power on 23 May, then expect broader participation of midcap and smallcap (stocks) as they are the most beaten down segment in the last 18 months.”
The Nifty had hit a record high of 11,883 on May 21. Final results will dictate the near term trend for the markets. “Usually after this kind of performance (on 21 May), normalcy should return to the markets and hence the next two sessions can witness muted response as bulls may try to consolidate their gains with a sideways range,” Mazhar Mohammad, Chief Strategist – Technical Research and Trading Advisory, Chartviewindia.in, told Moneycontrol.
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