Nifty hits all-time high on strong gross domestic product estimates

India’s Nifty reached historic highs on Friday, with the mid-small cap segment also on the rise, fuelled by faster-than-expected economic growth in the September quarter and increased optimism regarding the global interest rate outlook, Shrey Jain, Founder and CEO SAS Online, said.

Nifty closed at 20,267.90, marking a gain of 134.75 points or 0.67 per cent, while Sensex reached 67,481.19, climbing 492.75 points or 0.74 per cent, just 446 points away from its all-time high of 67,927.23, he said.

Although Friday’s figures could have been higher, investors exercised caution due to the upcoming election results scheduled for Sunday.

Data signals a potential rally for Nifty, projecting an upward move to 20,600 in the coming sessions, with a robust support level at 20,150.

However, there might be a pause in case of unfavorable election results. The overall trend remains positive, painting an optimistic picture for the market, he said.

Nifty PSU, Nifty FMCG and Nifty Reality were some of the outperforming sector up by 1.86 per cent, 1.58 per cent and 1.36 per cent respectively, says Vaibhav Vidwani, Research Analyst, Bonanza Portfolio.

During July-September quarter, India’s gross domestic product (GDP) growth was 7.6 per cent, exceeded street estimates of 6.8 per cent and RBI projection of 6.5 per cent, securing the country’s position as the fastest-growing major economy globally and as the exit poll of 5 state election draw positive indications point to a market rebound.

In Noida, Uttar Pradesh, Dixon Technologies’ subsidiary Padget Electronics has opened a new smartphone production facility.

In Q3 of 2023, the new manufacturing plant started producing smartphones for Xiaomi India, a multinational technology company.

The stock ended the day 8 per cent higher than when it opened thanks to the positive news, he said.

Hero MotoCorp, HDFC Life, Wipro, M&M, and SBI Life Insurance were the biggest losers on the Nifty, while the top gainers were NTPC, ITC, L&T, Britannia Industries, and Axis Bank.

Meanwhile the Nifty-50 index was up 5.6 per cent in November. A report by Kotak Institutional Equities said that “as per our ‘Nifty fair value’ model that accounts for changes in index valuation by looking at expected growth, bond yields, profitability and VIX, the index is now 13 per cent overvalued, compared to 8 per cent at the end of October”.

“While index starting valuation may not be a sufficient pre-condition for a price-correction, we do not expect any decent upside to the Nifty index over the next six months and do anticipate a time-correction,” the report said.

“In addition, with realized volatility dropping to an extremely low level, we recommend caution in the medium term,” the report said.

The report said that momentum has worked quite well over FY2024, and November was no exception.

Since the start of FY2024, concentrated and broad momentum portfolios have returned 35 per cent and 25.2, compared to 17 per cent for the Nifty index.

Concentrated and broad momentum portfolios returned 10.6 per cent and 8.9 per cent, respectively, in November. The optimized BSE-200 momentum portfolio returned 14 per cent, while the optimized Nifty-50 momentum portfolio returned 9.9 per cent.

The market momentum which pushed the Nifty up by 6 per cent in November is likely to be sustained since the incoming data and news are positive, says V.K. Vijayakumar, Chief Investment Strategist at Geojit Financial Services.

The Q2 FY24 GDP growth rate at 7.6 per cent has surpassed expectations. Particularly, the 13.9 per cent growth in manufacturing and 13.3 per cent growth in construction are impressive numbers. This has the potential to push the FY24 GDP growth rate to above 6.8 per cent, significantly higher than the RBI’s projection of 6.5 per cent, he said.

The exit polls results indicate a high possibility of political stability after the General elections. The market will appreciate this.

Since manufacturing and construction have done well, the bulls will focus on capital goods stocks like L&T and construction-related stocks. Cement stocks may attract renewed buying interest. Autos will continue to do well. Nifty is set to move to record highs, he said.

BSE Sensex scaled the 67,000 points mark on Friday with a jump of 457 points trading at 67,446 points. NTPC is up more than 4 per cent.

Barclays on Thursday raised its forecast for India’s economic growth to 6.7 per cent for the current fiscal year, following data that showed the economy grew at a much faster pace than expected in the July-September quarter.

Asia’s third-largest economy expanded 7.6 per cent in the September quarter, compared with 6.8 per cent expected in a Reuters poll and the Reserve Bank of India’s estimate of 6.5 per cent.