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Nifty target 26,300 through summer; 3 sectors to lead rotation: Laurence Balanco
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, Technical Analyst,, anticipates new highs for the Nifty , targeting 26,300 by summer, followed by a potential consolidation and a move towards 37,000. The market is experiencing rotation into lagging spaces like smallcaps, increasing participation breadth. Financials remain a key leader in the structural uptrend , with real estate and PSUs also expected to contribute to sector rotation : We have seen the rest of the world outperform the US since the April low. So, despite the S&P having a meaningful rebound, it really has been the rest of world indices from the ASX 200 to the DAX outperforming the US and you can throw the breakdown in the US dollar as an additional factor generating this relative outperformance. We still see positive price action in the Nifty. The Nifty itself has completed this double bottom pattern that trades back to 26,300. So, new highs for the Nifty is what we are looking the short term, we can see a bit more of a consolidation, but it does not take away the fact that the double bottom pattern still gives you this upside target of just over 26,300 and so there will be new highs for the in the US market particularly and in the local Indian market also, we have seen some rotation into lagging spaces. Last week, we highlighted the smallcap index which has started to accelerate higher and play catchup after underperforming since peaking in December. We have got a few of these catchup trades starting to develop and that should increase the participation breadth for this advance that we have seen in the just going back to that dollar index commentary, the break of 100 we think is meaningful, not only does it end the trading range that you had from 2022, but we think it does mark the peak to the dollar bull market that you have had from the 2011 lows. So, a major trend reversal is playing out. The breakdown from that 2022 to 2025 trading range with the break below 100 gets the dollar index down to the 89 to 90 think at least another 9% downside is likely in the dollar. Historically, we have seen that a weaker dollar has been positive for all the broader emerging market index. The EM versus DM ratio bottomed in December. We have not made any new relative lows. It does look like we are retracing against a trend of underperformance that we have seen over the past 15 years. We really think we are at the beginning of a re-rating in the emerging market basket. While India has not been a top performer year to date, we still think it is going to be one of the top performing or better performing emerging markets and our longer-term upside target for the Nifty still sits at over 37,000. So, the trend is there and continues to would not be surprised through the summer months that we get above the 26,300, then potentially see another consolidation period and then step towards that 37,000 area. But yes, the first target we will be focusing on is at 26,300 through the have seen a rotation into the laggards right now. We have seen it in the US where the stocks that have performed the worst over the past 12 months have outperformed the best performing stocks over the past 12 months and that has only happened in June. We have seen it in the local market. We are starting to see it in a bit of China too. So, this is a bit of a rotation theme that we are seeing we do not think there is a change in leadership as the leadership within the Indian market will remain centred around the financials, the underperforming spaces in IT, pharma, and FMCG are likely to continue. But outside of this short-term rebound and rotation into laggards, the structural uptrend from financials is intact and into that 37,000 target that we have, financials will be a key leader.: Probably the most recent one that looks very enticing here is still the real estate space. It is not just DLF that we have seen lead, but we have started to see some of the laggards within that come through. So, I definitely highlight real estate as a leadership sector coming through. And then, more broadly the PSU. So, not just PSU banks, but we are starting to see other PSUs also participate and recover, having peaked in July last year, having been the first major sector to have peaked last year, that started to base out and break through that downtrend resistance. So, we would put the PSUs as participating and driving some leadership now.
