Sensex hits 75K in pre-election rally; on track to hit 81,000, charts say

The BSE benchmark gained the last 5,000 points in just four months, with the rally gaining momentum in the last one week on hopes of stronger-than-expected Q4 corporate earnings.

The S&P BSE Sensex, on Tuesday, crossed the 75,000-mark for the first time ever, hitting a new all-time intraday high at 75,124. It took barely four months to rally from 70,000 levels to the 75,000 mark. The last 10,000 points have come in little over nine months.

The main catalyst behind the current uptrend, analysts said, is the hope of stronger-than-expected corporate earnings for the March 2024 quarter (Q4-FY24) and a pre-election rally, which is fueling the momentum over the past one week.

“Investors are pinning hopes on strong Q4 earnings. We also assume that domestic growth in H1-FY25 is likely to remain strong on the back of an acceleration in consumption demand amid election-related spending. Hence, the markets are expected to perform well, with high focus on large-caps that offer better safety margins in earnings,” said Prashanth Tapse, senior vice-president (Research) at Mehta Equities.

On the technical charts, the BSE Sensex is seen holding firmly above its key moving averages on the daily scale. The 20-DMA (Daily Moving Average) stands at 73,3,50 and 50-DMA at 72,850. The 200-DMA, a key determined for bullish and bearish trend stands at 68,500 - i.e. almost 9 per cent lower from current levels.

The weekly chart, on the other hand, suggests that the S&P BSE Sensex seems on course to test 75,800 levels in the near-term. The bullish pivot on the monthly scale is placed at 75,650-odd levels.

As per the yearly Fibonacci chart, as and when the BSE Sensex clears the 75,650 hurdle, it shall open the doors for a rally towards 78,100 levels, above which the next key targets are placed at 79,950 and 81,750.

“There can be some volatility on account of the March 2024 quarter earnings season, which will see stock specific moves rather than a runaway rally. There can be some profit taking after a sharp run seen from the March lows. The results season is starting soon with the IT companies announcing their numbers. Any disappointment can see sharp swings. That said, the S&P BSE Sensex can hit the 78,000 mark in the weeks ahead. The Nifty 50 is likely to scale past the 23,000 mark within a month,” said Ajit Mishra, senior vice-president for Technical Research at Religare Broking.

From the recent low of 72,012.05 hit on March 19, 2024, the S&P BSE Sensex has climbed nearly 4 per cent to over 75,000 levels now. Among individual stocks, NTPC, Mahindra & Mahindra (M&M), Tata Steel and Maruti Suzuki India have surged up to 16 per cent during this period, shows ACE Equity data.

Information technology heavyweights such as TCS, Infosys and Wipro, on the other hand have been top laggards that have slipped up to 6 per cent during this period, shows data.

Pre-election rally

The rise in the market, according to Jyotivardhan Jaipuria, founder & managing director at Valentis Advisors, is attributed to positive domestic and global cues. He believes that the good run can continue for some more time amid volatility, and the Sensex can give a 10 – 12 per cent return from here on in the next one year.

“The up move in the Indian markets resembles a pre-election rally. This has been the phenomenon in the last few general elections, too, where the markets have gained ground ahead of the general election. That apart, global cues have been supportive this time around. Most global markets are doing well, and so is India. That said, we remain concerned about the valuations with the markets trading 20x one-year forward earnings,” Jaipuria said.

As a strategy, Jaipuria is bullish on the 'domestic story' led by pharma, banks and industrial sectors. "We do not like fast moving consumer goods (FMCG) as the earnings are not great and valuations are expensive. We also do not like metals and the software sectors," he said.