Domestic markets are expected to open on a flat note on Thursday. Analysts expect lacklustre trading to continue, with select counters attracting activity. Gift Nifty at 24,355 against Nifty futures value of 24359.45 suggests a flattish opening.
Osho Krishan, Senior Analyst – Technical & Derivatives, Angel One Ltd, said: After a sustained period of bullish dominance, market sentiment is now more balanced, reflecting a potential sense of exhaustion following the recent rally. “The overbought conditions and recent hesitation at the elevated zone could be seen as an initial signal for a cool-down. Therefore, it is crucial to implement proper risk management strategies at current levels,” he adddd.
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Busting a few common market myths such as strong GDP growth, the market is trading at reasonable valuations. Higher post-tax returns in equities versus debt, strong earnings CAGR is a given and flows determine returns. Kotak Institutional Equities said: the raging bull market has resulted in increasing faith in narratives and myths, and declining focus on numbers and facts. We concur with bullish arguments (decent macro, strong earnings growth, long-term growth prospects), but note that these arguments are pointless without the overlay of valuations. It is obvious that the same argument cannot hold at all price levels,” it added.
According to KIE: “We wonder if we will ever get back to the good old days and ways of investment based on bottom-up business model-centric understanding of value in stocks (based on a range of probabilistic outcomes of the future), and investing in stocks based on the difference between price and value. “A large section of the market seems to confuse price with value these days (note the increasing usage of esoteric valuation methodologies to somehow have a fair value that is magically above the most recent market price, at all price points). The focus seems to have shifted entirely to forecasting prices of stocks (based on various forms of alchemy, including ‘flows’) versus determining value of stocks.”
Ashwin Ramani, Derivatives & Technical Analyst, SAMCO Securities, said: With an FPI long-short ratio of 82 per cent and a put-call ratio (PCR) of 1.45, the market appears to be overheated. Therefore, it is advisable to adopt a cautious approach when building aggressive fresh long positions. The call writers (3.55 contracts) lead the put writers (1.78 lakh contracts) at the 24,300 strike, and option activity at this strike will provide cues about Nifty’s future direction, he added.
Meanwhile, Asian stocks are trading flat in early deals on Friday.
