With the Indian stock market’s key benchmark indices—the Nifty 50, Sensex, and Bank Nifty—hitting fresh all-time highs, the central question remains: can this momentum be sustained, and what levels should investors monitor? In a recent interview, Sumeet Bagadia, Executive Director at Choice Broking, emphasized the significance of Nifty surpassing 26,277 and Sensex breaching 86,050, indicative of strong buying momentum, primarily seen in large-cap stocks, while mid and small-cap stocks lag behind.
### Key Support Levels
Bagadia pointed out that while India’s equities have reached all-time highs, the support levels remain crucial. Observing current trends, he noted support levels for Nifty around 26,000–25,800 and for Sensex at 85,000–84,500. To sustain the upward trend, momentum needs to remain above 26,300–26,400 for Nifty and 86,500–86,700 for Sensex. Investors are urged to focus on strong stocks for accumulation as gradual gains seem probable if the current trends persist.
### Forecast for Nifty and Sensex
In terms of future projections, Bagadia anticipates Nifty could reach between 26,500–27,000 by December 2025 and rise to 27,000–28,000 by March 2026. Similarly, he expects Sensex to climb to around 88,000–90,000 by December and 90,000–92,000 by March. He noted that, assuming economic stability, steady interest rates, and robust corporate earnings, this upward trajectory is plausible. However, he cautioned that breaking support levels could lead to downside risks, necessitating close market observation.
### Catalysts for Sustainability
Several factors, according to Bagadia, could help Nifty maintain new highs this year. The solid support levels and continuous buying indicate a robust base for further gains. Breaking through significant resistance levels with increased trading volumes would be essential for confirming a bullish trend. Positive performances in sectors like IT, banking, and FMCG, alongside stable interest rates and inflows from foreign investors, are also likely to add momentum. He suggested that small dips near support levels could present good buying opportunities.
### Large-Caps vs. Mid-Caps
When discussing potential returns over the next 12 to 18 months, Bagadia indicated that large-cap stocks display stronger performance trends, suggesting lower risk and steadier returns. While mid-caps might offer larger gains, their volatility poses a higher risk. Therefore, a balanced strategy would involve allocating the majority of investments to large-cap stocks while selectively investing in strong mid-cap stocks for additional growth.
### State of PSU Stocks
Regarding Public Sector Undertaking (PSU) stocks, Bagadia noted a robust rally over the past year. However, many stocks appear to be nearing overbought levels. While some individual PSU stocks might see further gains, the broader indices show signs of necessary consolidation. He advised a selective approach and exploring buying opportunities on dips, steering clear of overextended PSU stocks.
### IT Sector Valuations
As IT stock valuations revert to pre-COVID levels, Bagadia expressed that this might signal a stable phase for long-term investments in this sector. Significant support levels must be maintained; hitting these could indicate buying interest and set the stage for potential long-term growth.
### Foreign Portfolio Investors (FPIs)
Looking ahead, Bagadia anticipates a potential return of foreign portfolio investors by December, dependent on favorable market conditions. Stability in key indices could enhance investor confidence, drawing FPI inflows. Factors such as improved global liquidity, diminished interest rate concerns, and promising corporate earnings in India could trigger a resurgence.
### Upcoming Budget Expectations
Expectations surrounding the upcoming Budget hinge on measures aimed at enhancing economic growth, including increased government spending and consumer demand support. Tax relief targeted at middle-income households could bolster corporate earnings and enhance market sentiment. If the Budget incorporates these elements, it may lead to higher market buying activity.
### Challenges Ahead
Looking towards 2026, the equity markets could face multiple challenges, including increased volatility due to persistent inflation and possible interest rate hikes from central banks. Moreover, geopolitical tensions and supply chain disruptions could heighten market uncertainty. Investors are encouraged to remain disciplined and adaptable to navigate these fluctuations effectively.
### Advice for New Investors
For new or first-time investors, Bagadia underscores the importance of discipline and risk management over the pursuit of quick profits. Learning to interpret market trends and identifying clear buy and sell points can help mitigate emotional reactions to market movements. Diversifying investments across sectors and managing position sizes are essential for protecting capital, with an emphasis on patience and trend development.
Investors are reminded to consult certified experts and conduct thorough research before making investment decisions, as the views presented are those of individual analysts or broking firms.
