Market experts advise caution amidst record-high levels

The Indian benchmark indices are hovering around their record highs with the benchmark S&P BSE Sensex above 59,000 levels and the Nifty around 17,600.  

Market experts, however, are of the view that while the long-term bullish trend looks intact, there could be some amount of correction in the coming days as the US Federal Reserve meet outcome this week could accelerate it.  

On Friday, both the indices opened strong and gained further ground before profit-booking pulled down the benchmarks that closed with marginal losses. 

The 30-share S&P BSE Sensex closed at 59,015.89, down 125.27 points or 0.21 per cent while the broader Nifty ended at 17,585.15, shedding 44.35 points or 0.25 per cent.

Also Read: Sensex, Nifty end week in green; banking shares lead gains

Sachin Gupta, AVP - Research, Choice Broking says the benchmark Nifty has formed a bearish pattern on the technical charts, hinting at some amount of profit booking, although any dip could be looked upon as a buying opportunity.

"Technically, the nifty index has formed a bearish candle at the top of the trend… However, the bullish trend is still intact as the Nifty is holding gains above 17,250 levels. Although we can expect some fight between bulls & bears along with the volatility, every dip would be a buying opportunity. At present, the Nifty may find resistance around 17,800 levels while on the downside, 17,400 may act as support for the index," notes Gupta.

In a similar context, Sameet Chavan, Chief Analyst - Technical and Derivatives, Angel Broking says that while the current trend looks "extremely strong", the market could surprise, and it is best for investors to stay cautious.

"As of now, we are not advising to short but at least one can choose to keep booking profits on a regular interval and stay light on positions," states Sameet Chavan, Chief Analyst - Technical and Derivatives, Angel Broking.

Also Read: Sensex, Nifty fall off record highs on profit-booking; metal, IT shares top losers

"Friday's sharp correction from higher levels is clearly an indication of this and hence, we continue with our cautious stance. As far as levels are concerned, 17,700 - 17,800 are to be seen as immediate hurdles, whereas on the flipside, 17,450 - 17,250 should be treated as key supports. The first sign of real weakness would come only if we start sliding below the lower range," adds Chavan.

Fundamental analysts, meanwhile, feel that couple of factors that could determine the direction of the market in the coming sessions include news about the rise in Delta variant cases and the signals from the US Federal Reserve.

"The overall sentiment in the market remains optimistic, given improving macro data points and positive earnings expectation," says Siddhartha Khemka, Head - Retail Research, Motilal Oswal Financial Services, adding that the current high valuations could lead to "bouts of profit booking".  

"The weak global cues on account of worry over slower economic growth and rising Delta variant cases globally would market oscillating between greed and fear. Nervousness would be seen in the market next week ahead of Federal Reserve meeting, which could provide some indications on when the central bank will start withdrawing its monetary stimulus and start raising interest rates eventually," explains Khemka.