Nifty could hit 40,000 in long term, says CLSA
What's the story
Laurence Balanco, a technical analyst at capital markets and investment group CLSA, has predicted a major bullish breakout in Indian equities. He believes the Nifty 50 index could rally past 26,000 in the near term and potentially reach levels between 31,000 and 40,000 over the long term. Balanco sees a close above 25,500 by November-end as a possible long-term buy signal for investors.
Market analysis
Balanco sees significant shift in long-term outlook
Balanco's prediction comes after a strong recovery in Indian equities, with the Nifty jumping 8.58% last week.
The index closed at 24,986.40 during Sunday's special Diwali trading session, slipping 0.18% after the preceding week's rally.
Balanco sees a close above 25,500 by November-end as a key level that could change the long-term technical outlook of the market significantly.
Global perspective
Banking stocks likely to lead the rally
Despite the recent volatility in global equities, especially tech stocks after Democrats's sweeping win in US midterm elections, Indian equities have staged a strong comeback.
This is largely due to falling crude oil prices and renewed foreign institutional buying.
Balanco is particularly optimistic about banking stocks, which he says have broken out of their previous trading range with an upside potential of around 20%.
Stock highlights
Crude oil prices and rupee strength crucial for market performance
Balanco has identified ICICI Bank as a key player in the banking sector, noting its technical breakout within the Nifty Bank index.
He also emphasized crude oil prices and rupee strength as key factors for market performance.