The Nifty50 Index is trading near its all-time high levels and has rallied by 11% following positive market sentiments. FPI flows into Indian equities have turned positive due to the upgrade in GDP growth forecasts and stability in the currency. Commodity prices have weakened, leading to the possibility of stable or lower inflation, which could result in a rate cut later in the year. Macroeconomic data supports continued strength in Indian equities, with surveys indicating strong activity levels and improving consumer sentiment. The index is expected to reach 21,000 based on earnings growth and improving macro conditions.
If all goes as planned, Nifty might be headed towards 16,500 level with no immediate resistance at higher levels with the bulls all charged up to crush the Call sellers. In the event of a corrective dip, its immediate support would now lie at 16,150.
Updated Jan 13, 2021 | 08:15 IST
As benchmark Nifty index scaled yet another peak of 14,564 on Tuesday, it now trades at a record Price to Earnings (P/E) ratio of 28 times to its five-year average Bull run spurs stock valuations to record high levels; investors concerned over prices | Photo Credit: Thinkstock
Key Highlights
In 2008, Nifty traded at 40% premium over its five-year averages which lasted for only eight trading sessions
This is only the second time ever that Nifty forward PE premium crossed has 40% of its five-year average
The index has stayed at 40% for 10 straight trading sessions
The recent bull run which started after the March 2020 market crash has taken the Indian stock market to record peaks. It has sent stock valuations soaring amid concerns over high valuations.