Nifty Outlook: Nifty closed at a record high for the last three trading days and today on August 5, Nifty has crossed a new level of 16300. Now talking about the end of this year, NSE Nifty 50 can reach the level of 17400 in December 2021. According to the domestic brokerage firm, the volatility is decreasing rapidly, which is giving strong indications of a bull run in the Nifty. In July 2021, India VIX (indicating the expected volatility in the near term) fell to 13, which is much lower than the long term average of 22. Due to this, there are indications of further bullishness with limited decline in the market.
According to domestic research firm Axis Securities, if the VIX (volatility index) declines further, it will lead to a further rally in the market. Due to economic uncertainty and decline in volatility, this year investors have been forced to buy from smallcap and midcap stocks from November 2020 till last year. Strong returns are about to come.
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Bull Phase has come 10 times in Nifty
Before this, there has been a bull phase in the Nifty index 10 times. Each round of bull phase has given a return of 144 per cent in an average period of 27 months.
- The first bull phase came in 1990-1992 when it gave a return of 350 per cent in 22 months.
- Second phase – 1993-1994 – 104% return in 18 months
- Phase III – 1997-1998 – 17 percent return in 20 months
- Fourth Phase – 1998-2000 – 113% return in 15 months
- Fifth Phase- 2001-2004- Return of 127% in 28 Months
- Sixth Phase- 2004-2008- Return of 314% in 44 Months
- Seventh Phase – 2009-2010 – 141% return in 20 months
- Eighth Phase- 2012-2015- 92% Return
- Ninth Phase- 2016-2020- 72% Return in 48 Months
- Tenth Phase – Present – In this phase, a return of 107 percent has been received in 16 months.
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Midcaps more attractive than largecaps
On the basis of valuation, midcaps stocks look more attractive than largecaps. According to a domestic brokerage firm, midcaps were trading at a 45 per cent premium to largecaps in the bull phase of 2017. According to Axis Securities, it is raining IPOs at this time i.e. more number of IPO issues are coming and they are also getting success. Which indicates the attraction of people towards midcap and smallcap stocks. The bumper listing of Zomato in the market gives an idea of the strong risk appetite of investors regarding the next generation business model.
(Article: Surbhi Jain)