Markets hit record high — some experts say it is the final leg of the vaccine euphoria

• Indian equity benchmark index Sensex scaled to a record high of 44,523 points, and Nifty breached 13,000-mark for the first time on November 24.
• While the investors cheered the bullish market — investment experts are cautious that the market may have matured enough and is primed for a correction.
• The hope of a vaccine against COVID-19 has been a big driving factor in the current rally. Yet, as the cliche goes, the proof of the pudding is in the eating.

The Indian stock market closed at a fresh high on the vaccine hopes on November 24. For the first time in the history of the Indian stock market, equity benchmark index Sensex scaled to a record high of 44,523 points, and Nifty breached 13,000-mark.

While the investors cheered the bullish market — investment experts are cautious that the market may have matured enough and is primed for a correction.

Sushil Kedia, the founder of Kedianomics, told Business Insider that in the next 3-4 months, a minimum 20% correction is certain. However, it can be more severe depending on the circumstances. “And in the next 6-months, I am looking at a very-very dramatic crop in the stock market,” he said, describing the current rally as euphoric and complacent.


S Hariharan from Emkay Global Financial Services also thinks that at this level, there is a certain risk to the market. “As of now, the market is pricing in a robust recovery, while discounting a smooth roll-out of the government’s vaccination drive - hence, the risks of disappointment on both these fronts pose the major risk of stalling market momentum.”

Kedia said that’s how the market has been for years that “you have to anticipate ahead of the next cycle. So this cycle looks very much matured now.”

Vaccine may be born soon but it will take time to walk

The hope of a vaccine against COVID-19 has been a big driving factor in the current rally. Yet, as the cliche goes, the proof of the pudding is in the eating.

“Much of 2021 is going to be consumed in different challenges of the corona. I think there is too much complacent euphoria in the market right now — in which on the one hand a number of people are feeling left out and on the other hand elevations are at its extreme. Technically also the markets are at a point where inexplicably large and sharp corrections are a greater possibility than this continued drop,” Kedia highlighted.

However, it is not to say that a correction will begin tomorrow. According to Hariharan, the market strength is expected to become more broad-based now, with under-owned sectors like metals and public sector companies catching up with hotter sectors like financials . A similar performance may be seen in mid-caps that have lagged large-caps in the short-term.

SEE ALSO: From IndusInd Bank and Kotak Mahindra to Bajaj Finance — seven of the top ten Nifty gainers in the last three months have been financials

Elon Musk surpasses Bill Gates to become the world’s second-richest person as Tesla’s market cap inches closer to $500 billion