Nifty at 10,000 levels can be a reality before we welcome 2018. As we move to welcome the GST, India’s biggest tax reform since 1947, with optimism there are many more fundamental aspects of India’s as well as the world’s economy that augurs well for the 5 digit figure of the Nifty. As the GST aims at increasing the tax base and not the tax rates significantly, we will start to see the positive impact of GST on Indian economy from the 3rd quarter of 2017-18.GST is tax trigger, which will lead to business transformation for all major industries. GST would be favorable for FMCG and Logistics sectors.
We have seen a steady inflow of money in the markets from the FIIs & the DIIs and going by the indications we can even expect a substantial increase in the percentage of money to be invested from the EPFO corpus in the equity markets in order to give higher returns. This huge inflow of money in the equities will further push Nifty in the north direction.
Some of the sectors that will propel Nifty towards the psychological 5 digit mark are:
Post demonetization, the banks riding on liquidity never seen before and also with the banking reforms round the corner. The Government of India doing the tough talk against the defaulters, the BFSI sector has already bottomed out and is on the recovery path which is going to head further north in the coming 3-4 quarters. Similarly with Metals & Infra sectors will be pushing Nifty up as we see not just a domestic but also a global increase in demand as the global economy showing robust signs of recovery. Adding to that we expect another 2 rounds of rate hike by Fed this year as the FOMC is set to meet 6 more times in 2017. We would like to state that the Indian markets have assimilated the rate hike by Fed in March and have been sustaining at new all time highs showing its strength. In dissimilarity to Fed we expect RBI to announce a 25 basis points rate cut in its 2nd or 3rd Bi-monthly Monetary Policy statement scheduled for June 07 and Aug 02 2017 respectively which will give a further boost to our economy.
Logistics, Real Estate, Oil& Gas and Power & Power transmission will be other important sectors that will push towards the 10,000 mark. The major sectors that will be dragging Nifty are IT and Pharma, both the sectors being vulnerable to US President Trump’s pro US policies.
Recent RBI policy review was as per the market expectation, now all eyes on corporate earnings of Q4 2016-17 which would set the further direction of markets in near term.
Technical Outlook for markets:
Technically speaking, conferring to the Elliot wave theory starting from the lows of 2008 the market has moved up with the 2015 high marking the 3rd wave and the 4th wave showing the following retracement. Now as the market has crossed and sustained the 2015 high we can definitely say that the 5th wave, the bullish wave, has started and the target is just above the 10,000 level for Nifty in near future. Other vital technical indicators RSI, Stochastic, MACD also indicating strength in Nifty in forthcoming future.
Other factors on our locator will be US President Mr. Donald Trump Economic Policies, crude price, Rupee v/s Dollar and last but not the least our Honorable PM Mr. Narendra Modi Government Economic agenda.
As seen after the poll results from the 5 states the sentiments also seems to be in indulgence of an up move in Nifty, so going by fundamentals, technicals as well as the sentiments of the Indian economy the future seems bright and we can expect to cheer Nifty at the magical figure of 10,000!