Nifty's long road to 19k makes 20,000 pts a tall order amid rich valuations

Jury is still out on how soon index will top 20k; market has overshot and undershot valuations before. If strong momentum in FPI flows sustains, getting to 20k may not be long, believe analysts

Investor mood has turned buoyant with the Nifty breaching 19,000 for the first time. However, the landmark took a long time to come. The benchmark index had topped 18,000 back on October 11, 2021. The latest 1,000-point up move for the 50-share index---a 5.3 per cent gain—has taken 425 days. In other words, someone who bought the index in October 2021 had to wait for over 20 months to recover the investment value. An analysis of every 1,000-point move, since when the Nifty first touched 9,000 in 2015, shows at 425 days this is the second-most number of days the index has taken for a 1,000-point climb. The highest was 592 days for the index to move from 9,000 to 10,000.

The previous two 1,000-point moves from 17,000 to 18,000 and 16,000 to 17,000 had taken just 28 days and 19 days respectively. The jury is still out on how soon the index will breach the magical 20,000-mark.  With Nifty trading at rich valuations of nearly 21 times its estimated earnings for FY24 of Rs 915, there is little legroom more expansion. However, the market is known to overshoot and undershoot valuations. If the ongoing strong momentum in foreign flows continues, the wait for 20,000 may not be long, believe analysts.

Steep hike

The latest 1,000-point move took over 20 months

                                                    Nifty @19K Intraday               Date Open High Low Close Trading Days 8K-9K 3/3/2015 8,963 9,008 8,926 8,996 122 9K - 10K 25/7/2017 10,011 10,011 9,949 9,965 592 10K-11K 23/1/2018 10,997 11,093 10,995 11,084 125 11K-12K 23/5/2019 11,901 12,041 11,615 11,657 326 12K - 13K 24/11/2020 13,003 13,079 12,978 13,055 375 13K-14K 31/12/2020 13,970 14,025 13,936 13,982 25 14K-15K 5/2/2021 14,953 15,015 14,865 14,924 25 15K-16K 3/8/2021 15,952 16,147 15,914 16,131 120 16K-17K 31/8/2021 16,948 17,154 16,916 17,132 19 17K-18K 11/10/2021 17,868 18,042 17,839 17,946 28 18K-19K 28/6/2023 18,908 19,011 18,861 18,972 425              

Compiled by BS Research Bureau

           

Source Exchange/Bloomberg