Stock Market on Record Valuation: Before the start of 2021, some global brokerage houses and agencies had predicted that by the end of this year, the Sensex would cross 50 thousand and the Nifty 15000. But in the first month of the year, both indexes are seen reaching this level. The Sensex touched a level of 49795 in the business on January 13, while the Nifty also crossed the 14600 level. Even after the historic decline in the country’s economy, this market rally has persisted for the past few months. According to a Bloomberg report, despite the economic slowdown, high valuation of the market is now a danger bell. By the way, experts are also advising investors to be cautious in the current market.
Expert expressed concern
According to a Bloomberg report, strategists from Nomura Holdings and Kotak Mahindra Asset Management have warned about this. Let us know that the BSE Sensex has been gaining momentum for 10 consecutive weeks, which is a record after 2009. Experts are also worried about the rising valuation of the market. Actually companies are expected to grow in the morning. The market is also getting support from liquidity.
Sensex up 25000 points since March low
The growth of the market can be gauged from the fact that in the year 2020, both major indexes had more than 15% growth. At the same time, in January this year, 4 percent returns have been received from the market so far. In addition to largecap, mid and smallcap stocks have also been strong. Talking with the low of March, till Thursday, the sensex has gained more than 25000 points. Investors are also cautious about this rally with the Sensex approaching 50 thousand before the budget 2021.
Correction can bring a negative trigger
Ajit Mishra, VP-Research, Religare Broking Ltd, says investors are advised to be more cautious in the current era. They should only focus on risk management by carefully selecting quality shares. They say that volatility can be seen in the market in the short term or during the earning season. However, if there is some correction in the market, it will be better for the future.
At the same time, Jagdish Thakkar, director of Fortune Fiscal, says that it is true that the market is in an overbought situation. In fact, in the past the economy is expecting a rapid recovery, due to record foreign investment in the market and strong corporate earnings estimates, the market has gained strong momentum. Right now there is no specific negative trigger for the market. But if any such trigger comes in the earnings or budget, then a correction in the market cannot be ruled out.
Samit Chavan, chief analyst at Angel Broking, says investors should be prepared for higher volatility in the future. Riding at the current valuation will not be so easy. He says that the level of 14430 is very important for the market ahead. If it breaks down, then the weakness in the market may increase further. He says that in the last 2 to 3 days, many stocks have seen selling from the upper levels.
Eyes will be on budget
According to Bloomberg’s report, Nomura analyst Sion Mukherjee says that stable demand is the most important. Inflation is rising rapidly on top of it, which can reduce liquidity if it is controlled. According to Bloomberg, the Sensex may look stable for the next 12 months. However, during this period, the BSE 500 index and the Sensex may increase earnings per share by 39 per cent and 17 per cent.
According to the report, according to Nilesh Shah, managing director of Kotak Mahindra Asset Management, the equity market has got support due to lower interest rate and increase in liquidity. But further reverse direction can also be seen. Mahesh Patil, CIO of Aditya Birla Sunlife Asset Management Company, says that apart from inflation, even a slight disappointment in the annual budget over fiscal stimulus can hurt market sentiment.
(Also from input Bloomberg)