Once again, the markets are trading at all-time high levels. But it should be noted that only 33% of the Nifty stocks are close to their 52-week highs while the remaining stocks have either remained range-bound or have already corrected and are trading close to their 52-week trading close to their 52-week lows.
Even on the BSE 200 list, nearly half of the stocks are trading at 10% lower than their one-year highs.
A situation has emerged where in the performance of a few heavyweight stocks such as Reliance Industries, Maruti Suzuki, HDFC Bank, HDFC, IndusInd Bank, ITC and Hindustan Unilever have driven the Nifty to new highs in the past few days.
But, analysts continue to remain bullish on these stocks, and given the kind of flows that the mutual fund industry is seeing (over Rs10,000 crore a month), any meaningful correction in these stocks will call for fresh buying. While the other biggies such as Tata Consultancy Services, Infosys, Sun Pharma, ONGC, Oil India and Coal India that are trading close to their 52-week lows.
Interestingly, pharma, IT and energy sectors are close to 22% of the Nifty and are trading at the lower range of their five-year valuation bands.
A combination of these two factors point out that the broader markets are unlikely to see any major corrections, at least in the short term.