Nifty headed for lifetime high in June, analysts recommend capitalising on dips

Nifty headed for lifetime high in June, analysts recommend capitalising on dips
Nifty is headed for all-time high in June, say analystsCanva
  • Strong foreign institutional investor (FII) inflows, which have helped the benchmark index turn positive in May, bode well for June.
  • Analysts expect the Nifty50 to scale to new highs of 18,900 points in June, and they recommend investors capitalise on dips.
  • Midcaps, smallcaps and financial stocks are likely to outperform in June.
The Nifty50 is headed for a lifetime high in June aided by strong foreign institutional investor (FII) inflows that have helped the benchmark index turn positive in May. Midcaps, smallcaps and financial stocks are likely to drive the rally.

Analysts suggest that the Nifty50 may scale new highs of 18,900 in June, up from the current 18,600 level.

FIIs have bought equities worth ₹22,365 crore so far in May, and they are likely to close on a positive note for the third consecutive month. Auto, realty, consumer durables and fast-moving consumer foods (FMCG) sectors have driven the benchmark Nifty50 index in the last one month.

“Going ahead, we expect the index to resolve out of the intermediate hurdle of 18,500 and challenge the lifetime high of 18,900 in the coming month,” said a report by ICICI Direct.

Amongst the top picks of analysts at ICICI Direct are blue chips like State Bank of India, Tata Motors, Maruti Suzuki, Reliance Industries, Tata Consultancy Services (TCS) and ITC. The brokerage also notes that stocks in the midcap segment are likely to outperform in June.


Sectoral index1-month performance
Consumer durables6.8%
Private bank2.8%
Financial services1.9%
Oil & gas0.6%
PSU bank-3.2%

Source: NSE, as on May 30, 2023

Capitalise on dips

To make the most of the momentum in the medium-term, analysts recommend investors to capitalise on dips, using the ‘buy on dips’ strategy.

A ‘buy on dips’ strategy is when investors look for short-term declines in share price to invest in the stock, with the belief that it will go up in the longer term.

“We expect broader markets to accelerate upward momentum fuelled by 18 month’s consolidation breakout in the Nifty Midcap index. Hence, dips should be capitalised on to build a portfolio from a medium-term perspective,” the ICICI Direct report said.

In the last one month, the Nifty midcap index has gained the most. Analysts believe the outperformance of Nifty Midcap will continue in the medium term, sustaining the broader market’s upward movement going forward.

Index1-month performance
Nifty Midcap 1005.7%
Nifty Smallcap 2504.8%
Nifty Total Market3.8%
Nifty 5003.7%

Source: NSE, as on May 30, 2023

Overall, ICICI Direct expects the midcap index to rally up to 25% in the coming 3-4 quarters.

Making the most of Nifty’s ‘reasonable valuations’

Indian equity markets’ valuations also have come down to ‘reasonable’ levels when compared to global peers, according to analysts at Kotak Institutional Equities.

The 12-month forward price-to-earnings (PE) ratio of the benchmark Nifty50 index is now below the 10-year average, in line with global peers. Its current PE ratio is at 21.24, compared with its 10-year average of 24.24.

PE ratio is a popular metric to measure valuations.

“The Indian market is trading at reasonable valuations compared with recent history and bond yields,” said the analysts at Kotak Institutional Equities.

Echoing the sentiments of ICICI Direct, the analysts at Kotak also believe that there is still some juice left in midcap stocks, apart from smallcap and financial stocks.

While the Nifty Midcap 150 index is trading at a PE of 26.2, Nifty Smallcap 250 is trading at a PE of 20.05. Their 5-year average PE stands at 34.7 and 33.36, respectively.

Going forward, here are analyst favourites across categories:

Large cap stocksMid cap stocksSmall cap stocks
State Bank of IndiaIDFC First BankShoppers Stop
Axis BankL&T FinanceTejas Network
Reliance IndustriesTata PowerTransport Corporation of India
ITCJubilant Foods
Tata Motors
Maruti Suzuki
Coal India

Source: ICICI Direct

The $NIFTY50.NSE is presently hovering near its all-time high, indicating a significant milestone for the index. However, it faces a formidable resistance zone at these levels, which has prompted consolidation since October 2021.Considering the recent bullish trend in the NIFTY, it is reasonable to anticipate a potential pullback or sideways movement from its current position. Following this anticipated correction, there is a strong likelihood of the NIFTY making a determined push to surpass its existing all-time high.

— (@iamMarketWiz) May 30, 2023


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