Nifty likely at 16,400 by September 2021: ICICI Securities

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Indian equity benchmark indices settled close to their lifetime highs on Wednesday. The 30-share BSE Sensex ended at 51,017.52, up 379.99 points or 0.75% while the broader Nifty50 closed 93 points or 0.61% higher at 15,301.45.

The upward trend of the markets is likely to continue from here amid a steep decline in daily Covid-19 cases and robust Q4 earnings.

The Nifty has formed a strong support base in the 14,400-14,600 range despite earlier anxiety about surging Covid cases across India and now the broad sector participation is likely to ensure the trend remains positive, said ICICI Direct in a report.

The formation of higher peak and trough coupled with multi-sector participation makes us confident of reiterating our structural positive stance. We expect the Nifty to resolve above lifetime highs of 15,400 and eventually head towards a revised target of 16,400 over the next quarter, led by BFSI, consumption, auto and infra. In the process, we do not expect the index to breach the key support threshold of 14,600. Thus, dips should be capitalised on to accumulate quality large-cap and midcaps,” stated the report.

Broader market

The brokerage is of the opinion that the broader market will extend its structural outperformance. One should not be fearful rather participate in a structural bull market as significant steam is left over the next couple of quarters. As historically, similar breakouts in 2009 and 2014 resulted in a structural bull market over the following two years. The same rhythm can be maintained in CY21.

Sectoral outlook

The Bank Nifty has regained positive momentum and started outperforming the Nifty. Going ahead, ICICI Direct expects Bank Nifty to continue its current strong momentum and rally past its previous all-time high (37,708) and head towards 38,600 levels in the medium term as it is the price parity with the previous major up move.

Auto has moved from the neutral quadrant to the outperformance quadrants signalling a resumption of uptrend and provides favourable risk-reward set up for the next leg of up move.

Similarly, PSU stocks are placed in the outperformer quadrant after the recent up move. PSU stocks are witnessing strong momentum and are expected to continue their outperformance.

Likewise, capital goods stocks resumed their fresh up move after the recent breather. Thus, it provides a bargain buy opportunity with a favourable risk-reward set-up.

On the other hand, metal stocks after the recent sharp up move is seen forming a higher base and are expected to perform at par with the market. Even the large-cap IT stocks are expected to continue with their current consolidation and perform at par with the market.