Nifty heading for 15,400 in coming months; IT, Banking, FMCG stocks set to outperform

NSE Nifty 50 has fallen significantly from its all-time high of 15,431 in the month of March.
(Image: REUTERS)

NSE Nifty 50 has fallen significantly from its all-time high of 15,431 in the month of March. However, the index did not break its 50 days EMA, which has acted as strong support since May last year. Domestic brokerage firm ICICI Direct believes the healthy retracement from February highs now gives investors a fresh entry point, expecting the index to scale back to all-time highs in the coming months. “We expect the index to hold the strong support of 14,400 and gradually retest lifetime highs of 15,430 in coming months,” ICICI Direct said in a report.

The index has corrected on an average of 9% on every retracement before bouncing back strongly. The recent correction, in ICICI Direct’s view, has helped the index to cool off the overbought condition. The brokerage firm expects domestic markets to mirror developed markets, which are trading near all-time highs, and hence expects a bounce back. However, a decisive close below 14,400 would disrupt the rhythm and extended correction will unfold, they warned.

Broader markets in good shape

Opportunities are also galore in the smallcap and midcap space. The Nifty Midcap 100 corrected 9% from its recent high, similar to past corrections. The index has held above 10-week EMA since June 2020. “We expect strong positive correlation with developed market peers to remain intact for the midcap index as US index forming a higher base around fresh life-time high,” ICICI Direct said. Meanwhile, the Nifty Smallcap 100 index is still 15% away from all-time highs. The smallcap index corrected 8% from recent highs, which now offers fresh buying opportunity.

Bank Nifty has corrected from its Budget highs but is expected to hold above strong support zone of 32,600-33,000 and witness a pullback towards 36,500 in the coming month, according to ICICI Direct.

IT, Banking, FMCG to outperform

Among sectors Information Technology, Banking, and FMCG remain outperformers on the charts. IT stocks took a breather for two months and are now sitting in the outperformer quadrant. Bank stocks galloped after the budget but now after a firm correction are expected to resume uptrend. FMCG stocks, ICICI Direct said were in the ‘bargain buy’ quadrant but are now outperforming and are likely to continue doing so. While commodity cycle is the buzzword on Dalal Street, the brokerage firm expects metal and capital goods stocks to now consolidate after having been outperformers.

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