Clever valuation at an all time high, Sensex nearly 50,000; should you invest more, take a break, or make a profit?


Nifty has already crossed the 14,550 mark and now all eyes are on Sensex as a 50,000 bar would be crucial for the Indian benchmark. Image: Reuters

BSE Sensex and Nifty 50 hit all-time highs in hopes of a rally and broadly bullish sentiment. On Wednesday, NSE’s Nifty finished nearly flat, but with a record 14,564.85 points. Earlier on Tuesday, Nifty settled at 14,563.45 and hit a record valuation of 40x. According to data available on the National Stock Exchange, the index closed the previous session with a P / E multiple of 39.94.

Likhita Chepa, senior research analysts at CapitalVia Global Research, told The Bharat Express News Online that with valuations being quite high, the chances of a near-term correction have increased. Nifty has already crossed the 14,550 mark and now all eyes are on Sensex as a 50,000 bar would be crucial for the Indian benchmark.

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BSE Sensex is just over 500 points away from its intermediate resistance level of 50,000. According to analyst, there is a good chance that the Sensex will break through this level as most companies’ third quarter results are expected. be better than those of the previous quarter.

Where will Sensex, Nifty be heading compared to current levels?

During today’s session, the major indices opened strong, but quickly experienced volatility on lukewarm global signals and constant selling pressure at higher levels. Vishal Wagh, head of research at Bonanza Portfolio Ltd, told The Bharat Express News Online that in the bull market, an intraday drop is a buying opportunity until there is no big day. When the major indices are at an all time high, a buy-on-dip strategy should be adopted. The current rally may continue until Nifty is above 14470 at the close. Wagh also added that on the upper side the Nifty could run around 14710.

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What should be the strategy of investors?

Technical analysts expect more optimism ahead of the 2021 Union budget. This year, the Union budget will be presented to parliament on February 1, 2021. Last month, Union Finance Minister Nirmala Sitharaman said this budget “would be unlike anything from the past 100 years”. Rajesh Palviya, Technical and Derivatives Manager, Axis Securities, told The Bharat Express News Online that investors should stay invested in the market and track their stop loss above the 14200-14000 level. The strong buying flows of FII indicate that this rally will continue and that Nifty may move up to the 15,000 level in the near term, so buying on dips continues to be our preferred strategy.

Chepa advised traders and short investors to adhere to a strict stop loss. While long term investors should find buying opportunities in a correction phase. A Kotak Securities analyst said a correction in the Indian stock market cannot be ruled out if Nifty and Sensex are trading below 14435 and 49100, respectively. Below these levels, the correction will likely continue to 14400-14300 for Nifty and 49000-48650 for BSE Sensex. “On the other hand, 14650/49700 would be the immediate hurdle for the bulls, above the same the index could go up to 14700-14735 / 49850-50000,” said Shrikant Chouhan, vice president Executive, Technical Equity Research at Kotak Securities.

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