Markets inched higher for the last week. Amid further consolidation of news flow and results Nifty managed to close at yet another all time high. Nifty sits pretty at 10450 levels. Signs of over heating can be sensed. However the underlying sentiment is very strong and positive. Some of the results are being digested nicely. Most companies have delivered stronger than expected results further boosting sentiment. It will be a wait a watch week as further results starts to kick in and we progress towards the peak of the result season.
Technically speaking markets are looking very strong. May be a tad-bit overheated. Nifty at 10450 practically has no resistance. One may have their own calculations as to where markets would top out. However, we are in uncharted territory. Having said that a bit of caution is advised as overbought zones are not far away. On the downside however, a break of double top has provided good support zones. The 10250 and 10180 are two short-term supports on Nifty. A pull back (if on the cards) should test these out in the near term.
Fundamentally speaking we are at THE peak. Nifty P/E is around 25-27. A range that has proved the historical tops in many past bull markets. Having said that liquidity is abundant. MFs are pouring in money. Retail is pouring money in MFs. FIIs have suddenly turned buyers as DIIs take a back seat. It will be interesting to watch the result season. Even slightest hints of good results will give a very big boost to earnings bringing down the multiples.
Globally, new fed chair has been selected. That news is old. Markets across the globe stayed buoyant. There is virtually no “obvious” trigger that can pull down sentiment and markets. An exogenous shock can be in the making but time will tell when it surfaces. Dow, NASDAQ and all European markets are gush with liquidity. Data indicates Fed may raise interest rate however it is all speculative at this stage.
Sector talks – Banking! This single sector and its constituents will lead the markets. Bank Nifty has broken past its tops reversing the divergence. Technically if current levels sustain, one may see Bank Nifty head higher. Pharma has come a long way. Nifty Pharma looks prime for 10k as well. Overheating in metals is still evident. One may see some pull back in metal counters. A similar space – Infra has seen a very long sharp rally. May see some pull back. Be cautious otherwise.