Bonaz Capital | Market Update

Sensex at record high! The rally is not over, prepare for 31,000 in June
The S&P BSE Sensex created history on the expiry day on Thursday as it rallied 494 points to hit a fresh record high of 30,793.43, surpassing its previous peak of 30,712 hit earlier in the month of May.
The rally was not limited to Sensex as 22 stocks hit a fresh all-time high on the BSE which include names like Maruti Suzuki, Shakti Pumps, EIH Hotels, Adani Transmission, etc.
About 88 stocks hit fresh 52-week highs on the BSE including L&T, HDFC Bank, HUL, L&T Infotech, TVS Motor, Voltas, Ion Exchange, ICICI Bank, Eveready Industries, and KEC International.
The Nifty closed above its crucial resistance level of 9,500 but failed to hit a record high. It rose 149.20 points to close at 9,509.75. It rose to an intraday high of 9,523.30.
The market witnessed short covering move after concerns over possible rate hike by the US Federal Reserve were abated which forced short-sellers to cover their positions.
Latest FOMC minutes highlighted that policymakers at US Federal Reserve agreed that they should hold off on raising interest rates until it was clear that a recent US economic slowdown was temporary.
On the options front, for the June series maximum Put OI was seen at strike prices 9,000 followed by 9,300 and 9,400 while maximum Call OI is at 9600 strike.
"The market rebounded from previous days fall as FOMC minutes shared its concern over the hike in US rate in the future due to a slowdown in economic growth, which is positive for EMs. While short covering ahead expiry and appreciation in INR added impetus to the rally,” Vinod Nair, Head of Research, Geojit Financial Services Ltd told BonazCapital.
The market moved in a narrow range for six long days to finally break out and register a strong bull candle on Thursday. It gave plenty of opportunities for investors to buy on dips, but for those who missed, the rally is not over yet, suggest experts.
The S&P BSE Sensex can climb Mount 31K by June while Nifty50 could well hit 10,000 mark by December 2017.
“We have been on a one way street since December 26, 2016, primarily because of the misconceptions by the FIIs and analysts on the impact of the demonetisation and their collective inability to judge the extent of the public’s support for the programme and Mr. Modi,” Vk Sharma - Head of Business, Private Client Group at HDFC Securities told BonazCapital.
“A level of 31k in the Sensex in the month of June seems a possibility, we still higher levels for the year end for the Nifty. We have a target of 10,400 in the Nifty for CY 2017,” he said.
The rally is unlikely to get over anytime soon despite concerns over geopolitical concerns, US Federal Reserve rate hike, or rise in commodity prices. One major factor driving the optimism is global as well as domestic liquidity.
The domestic institutional investors (DIIs) have poured in close to Rs 4000 crore while foreign institutional investors (FIIs) remained net sellers to the tune of Rs 889 crore according to provisional data.
“There is huge underlying momentum of liquidity. We have seen mutual fund flows increasing from an average of Rs 4,000 crores per month to an all-time high of around 9,000 crores in the month of April’17,” Arindam Chanda, Head, Retail Broking, IIFL Group told BonazCapital.
“In a scenario of low-interest rate and absence of other attractive asset class equity market is well positioned to see sustained interest from all class of Investors. Globally also the rarity of an economy growing consistently more than 7% positions India as preferred destination for foreign fund flows,” he said.