Domestic markets are expected to open flat on Monday despite ruling at peak levels. According to analysts, though valuation is a concern for domestic markets, participants, especially institutions, are still in hold mode. According to them, the upcoming Budget and Q1 results of India Inc. will anchor market movement.
Gift Nifty at 24,390 signals 24,379, indicating a flattish opening for Nifty. Ajit Mishra – SVP of Research, Religare Broking, said: “Looking forward, market direction largely will be influenced by upcoming earnings reports and discussions on the Union Budget. Global market trends, particularly the robust performance of US markets, will also be closely watched.”
Shrikant Chouhan, Head Equity Research, Kotak Securities:In the upcoming Union Budget, markets remained optimistic about strong government support for the economy, especially for the manufacturing sector. Market optimism continued to extend, with IT services finding flavour ahead of the upcoming Q1FY25 earnings season.
Analysts expect FPI flows to remain volatile.
Milind Muchhala, Executive Director of Julius Baer India, said: FPI activity has remained muted in the past three years, to some extent impacted by weak EM flows amid a strengthening USD and also due to the significant outperformance/premium valuations of India vs. EM peers (such as China) of late. Also, some funds were probably waiting on the sidelines for the election event to be over.
“However, we believe that India remains an attractive investment destination amid a healthy economic and earnings growth momentum, and the FPIs cannot afford to ignore the markets for too long. In the event of a global risk-on environment, triggered by increasing expectations of rate cuts, it could lead to increasing flows to EM equities, with India expected to emerge as one of the bigger beneficiaries of the flows,” he added.
According to Dr V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services, “A significant feature of FPI flows is that external factors like rising bond yields in the US and low valuations in other emerging markets have triggered their selling in India. When that situation changes they again become buyers in India. In fact in recent days they have been buying the same segments and stocks at a higher price than the price at which they sold. This experience tells us that FPI selling in India is an opportunity for domestic investors.”
Meanwhile, equities across the Asia Pacific region are marginally down in early Monday deals.
