Can Sensex hit the 65,000 mark in the current rally?

In a sharp reversal from June lows, the frontline Sensex and Nifty indexes rebounded around 16% each.

After hitting a four-month high last week and recovering the 60,000 level, the Sensex fell 650 points on Friday as investors exercised caution. The Nifty came close to 18,000 during the week but closed near 17,700.

The rally in recent weeks has been led by a turnaround in foreign capital outflows and expectations of a slowdown in rate hike cycles amid falling commodity prices. However, analysts warn that any possible long-term recovery will always be marked by bouts of volatility.

Joseph Thomas, head of research at Emkay Wealth Management, says moderating inflation in the US and India has boosted stocks. This suggests that central banks could slow rate hikes. However, central bank policies will not be flexible. This can put pressure on the markets.

Sharing similar views, VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services, says, “Market momentum is likely to face headwinds from now on. With the sudden sharp rise in the dollar index to the 107.6 level, regular FII buying may also run out of steam. Some profit booking and diversion of money into fixed income securities can be seen as a short-term strategy” – VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services

That said, from the technical charts, the benchmarks look bullish in the medium term.

Business Standard’s Avdhut Bagkar says current sentiment remains bullish. Sensex, Nifty crossed 61.80% Fibonacci retracement. Sensex above two big crucial levels of 58,500 and 59,800. Sensex may reach 65,000 in the short to medium term. A nifty break of the trendline has emerged at 17,800; can reach 19,000 points.

Markets will watch global peers, the trajectory of foreign inflows and oil prices for direction today. Separately, later in the week, airport services aggregator Dreamfolks Services’ initial public offering will open for subscription on Wednesday.

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