Nifty, Sensex Hit New Highs But Market Analysts Advise Caution
Markets are slated for growth but one has to be mindful where that growth is coming from, say analysts.
Wednesday saw Nifty close at a new high, while Sensex also ended above the 75,000 level for the first time. However, market analysts advise caution as there have been a pattern of push-back after markets reach new highs.
"Each time you know the markets have clocked a fresh 52-week high or fresh all-time high since January, the markets have been pushed back to the previous range. That's not a sign of strength," said Jai Bala, founder and chief market technician of Cashthechaos Index Trade.
Commodities are moving up and the dollar is not weakening, which is an indication that something is mispriced in the global equity market, he said. Bala expects a correction to happen soon. "You can still be bullish, but don't drop caution."
"Bull markets are made to climb a wall of worries, which is what we are witnessing right now," according to market expert Hemang Jani.
Markets are reaching all-time high, despite important events like the US CPI numbers, which are going to be out tonight and the upcoming earnings season, he said. "This shows that the sheer momentum and the flow of money is so strong that the people are not too much perturbed by that."
"Markets are slated for growth but one has to be mindful where that growth is coming from," according to Vikaas M Sachdeva, managing director of Sundaram Alternate Assets.
While he is constructive on the markets for a time span of five years, he doesn't feel the same for the span of a year. Last year, profit was made due to margin expansion, which might not be the case this year, he said.
Some stocks have run ahead of schedule and there is a need to look at quality stocks and upcoming trends, Sachdeva said. As India moves ahead to become an economic superpower, few trends like financial services— which are already in play—consumption, manufacturing and digital are going to grow, he said.
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