By Nikhil Dedha

New Delhi [India], November 13 (ANI): The Nifty could reclaim its all-time high over the next two to three months, provided domestic and global conditions remain supportive, but a sustained rally will depend on broader participation from mid-cap and small-cap stocks and a decline in crude oil prices, Ajit Mishra, Senior Vice President, Research, Religare Broking, told ANI.

Mishra said the domestic market has witnessed a sharp recovery in recent weeks, bringing the benchmark index close to its previous record levels. However, he said the next phase of the rally would require participation beyond select large-cap and quality stocks.

He said, "If everything is aligned, then probably maybe 2-3 months is something that we might see a new high, but more importantly than seeing a new high, the participation on the broader scale. That is something which is required." 

He said broader market participation would be more important than simply the Nifty reaching a new record. At present, mid-cap and small-cap stocks are lagging, while foreign institutional investors are concentrating their investments in quality companies across sectors.

He added that earnings growth would be a major trigger for broader market recovery. A sustained improvement in corporate earnings, along with participation from mid-cap and small-cap stocks, would help restore investor confidence.

Mishra also pointed to crude oil prices as a key external risk for Indian markets. He said a return towards pre-war levels in crude prices would help ease concerns and support a more sustained market recovery.

The recent rally has also been supported by a strong return of foreign investor interest. However, he expects foreign buying to remain selective initially, even if concerns around US inflation and possible interest rate hikes by the US Federal Reserve continue to create volatility.

He said India's valuation premium has moderated substantially after two to three years of consolidation and correction. The improving earnings environment, particularly reflected in the second-quarter results, is also making Indian equities attractive to foreign investors.

On the recent flat market movement, Mishra said the Nifty had rallied around 3,000 points in a relatively short period, making a pause and a few sessions of consolidation natural.

Mishra said the recent correction and consolidation in the IT sector could create opportunities, as companies are preparing to generate revenue from AI-related services and support the infrastructure behind these technologies.

He believes the negative sentiment around the sector has largely eased, although companies will need to return to a stronger growth path. (ANI)