Large-cap stocks that have largely underperformed for the year are beginning to show momentum, according to market analysts.
There is a switch from stocks that have given decent returns to those that have underperformed, according to Aditya Agarwala, head of research and investment at Invest4Edu Pvt. "Among the top Nifty gainers today, most of the stocks are the ones that have been big-time underperformers and they have started to take leadership."
Some of the banking stocks are also taking leadership, which had underperformed for most of the year, Agarwala said.
This year is an exception to the year-end trend where the activity is usually low as retail investors are pouring into the stock market in an unprecedented way, according to G Chokkalingam, managing director at Equinomics Research Pvt. "Every week, about 8–12 lakh new investors are coming in... so, there might be a lot of actions in the remaining five days of the calendar year."
Chokkalingam is a little nervous about small caps because the market cap build-up is huge and valuations are highly stretched.
The benchmark indices ended higher despite starting the day flat, as HDFC Bank Ltd., Reliance Industries Ltd., and Kotak Mahindra Bank Ltd. gained.
Agarwala said the Nifty Bank could gain another 1.5% in the next couple of sessions. "Looking at the index, I am not too bearish, and Bank Nifty can outperform from hereon."
The Nifty Bank has clear support at 47,500 and a first target at 48,000 can be expected. The leadership will continue in the likes of Kotak Mahindra Bank Ltd., HDFC Bank Ltd., ICICI Bank Ltd. and Axis Bank Ltd. Agarwala said.
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