Nifty to hit 15,700 soon, midcaps, smallcaps to outperform; fresh entry opportunity in Bank Nifty

NSE Nifty 50 index has retraced some of the post-Budget rally gains, falling nearly 5 per cent over the last five days from all-time high. After making a new record high of 15,432, Nifty underwent healthy retracement amid overbought conditions. NSE’s Nifty 50 is expected to challenge the lifetime high and gradually move towards their revised target of 15700 in coming months, ICICI Direct analysts said in a note. Nifty 50’s key support is seen at 14,300. The brokerage advises investors to capitalise any dips from here to accumulate quality stocks in a staggered manner.

Nifty midcap, smallcap indices to continue outperformance

The relative outperformance in the Nifty Midcap index is likely to continue in coming months, the note said. On Wednesday, Nifty MidCap 100 index was trading nearly one per cent up at 23,245.40. It hit a fresh 52-week high of 23,640.05 in intraday deals on February 18, 2021. Since then, the midcap index has fallen over 2 per cent. The Nifty smallcap index is still 16 per cent away from all-time high. Hence, catch up activity can be seen in smallcap stocks.

Based on the weekly chart, resilience has been seen during the recent profit booking after the Nifty MidCap index declined by 4 per cent as compared to a 5 per cent fall in the Nifty 50 index. Analysts also said that since May 2020 price-wise intermediate correction has been to the tune of 9 per cent and time-wise it has not exceeded for more than three weeks. On multiple occasions, it has been observed that elevated buying demand emerged from 10 weeks EMA. Also, a strong positive correlation with developed market peers would act as a tailwind for the Midcap index as the US index forming a higher base around fresh life-time high. All these factors suggest the outperformance in Nifty MidCap 100 index in the upcoming months.

Fresh entry opportunities in Bank Nifty

Bank Nifty structure remains firmly positive. Analysts believe that the current breather in the sectoral index is offering fresh entry opportunities to the investors. The Bank Nifty rallied over 25 per cent to scale a fresh lifetime high of 37,708 in the post Budget rally. In the current scenario, the index has seen a correction of 7 per cent by declining in the six sessions. “Hence we expect the index to maintain the same rhythm and buying demand to emerge around 34,500-34,000 levels,” analysts at ICICI direct Research added. While on the higher side, the index is expected to retest its all-time high around 37,800 in the coming month.

Bank Nifty’s crucial support lies in the range of 34,000-34,500. Therefore, investors have been advised to use the current breather as a staggered buying opportunity in quality banking stocks.

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