More Stories

Informist, Friday, Sep 20, 2024

 

By Noel John

 

MUMBAI – Analysts are divided on the direction of the domestic market next week after the benchmark indices made fresh record highs in the past few sessions. Some expect the Nifty 50 to cross the psychological level of 26000 points owing to strong liquidity, while some expect investors to take money off the table after the sharp run up and because of expensive valuations. Domestic indices will also take cues from the global markets, analysts said.

 

Today, the Nifty 50 and Sensex ended at record closing highs. The Nifty 50 ended 1.5% higher at 25790.95 points and the Sensex ended 1.6% higher at 84544.31 points. The headline indices notched fresh record highs this week after the US Federal Open Market Committee, late Wednesday, cut the federal funds target range by 50 basis points to 4.75-5.00% at its September meeting. This move came after 14 months of keeping rates at an over two-decade high.

 

"The key takeaway from the Fed's commentary is the expectation of another 50 bps rate cut in 2024, with further cuts likely in 2025 and 2026, which is encouraging for the global economy," Krishna Appala, senior research analyst at Capitalmind Research, said in a note today.

 

The Nifty 50 is likely to remain higher till the time the 25000 level is sustained on the downside, said Sunny Agrawal, head of fundamental equity research at SBI Securities. Apart from global cues, investors will also track Prime Minister Narendra Modi's visit to the US, Agrawal said. Modi will start his three-day trip in the US on Saturday.

 

"While intra-day volatility would continue amid geopolitical tensions and global uncertainty, strong domestic investors' appetite for equity assets will keep Indian markets on a strong footing in the medium to long term," Prashanth Tapse, senior vice-president of research at Mehta Equities, said in a note today.

 

The indices will continue to rise for a couple of weeks more due to strong inflows, Vinit Bolinjkar, head of research at Ventura Securities, said. Following the US Fed's decision, the chances of a rate cut by the Reserve Bank of India are very high as the Indian central bank has always kept its stance aligned with the US, Bolinjkar said. He expects the RBI to start cutting rates by December.

 

"In India, the RBI's inflation target is set at 4%, and with the CPI Index for August 2024 at 3.6%, this indicates a possibility of a rate cut in the near future," Appala of Capitalmind Research, said. The real impact will be felt when the RBI actually begins cutting rates, as we can expect to see an improvement in credit growth, Appala added.

 

Sectors that are rate-sensitive, such as automobile and non-banking financial services, will continue to see buying interest in the coming week, according to Bolinjkar. India will also attract more foreign investments in the coming sessions after the US rate cut, as no other emerging markets except India show strong growth, he added.

 

Although there are concerns regarding stretched valuations, one should keep in mind that the price for growth will always come at a premium, Kranthi Bathini, director of equity at WealthMills Securities said. "The biggest risk in a bull market is to not take any risks," Bathini said.

 

Saral Seth, vice-president of institutional equities at IndSec Securities, said they are cautious going forward. According to Seth, current valuations are expensive and the market is poised for a correction in the coming week. This is just a liquidity driven rally and the Nifty 50 should at least correct by 5-7% from the current levels, Seth said.

 

The put-call ratio for the Nifty 50 index is currently at 1.50, Brijesh Ail, head of technical and derivatives at IDBI Capital Markets & Securities, said. A put-call ratio greater than 1 indicates predominance of put options, which is indicative of a strong bearish sentiment where traders anticipate a cool down. "Next week, I will be looking to take profits and stay light," he said. Ail expects profit booking in all sectors next week, except automobile and banking.  End

 

Edited by Aditya Sakorkar

 

For users of real-time market data terminals, Informist news is available exclusively on the NSE Cogencis WorkStation.

 

Cogencis news is now Informist news. This follows the acquisition of Cogencis Information Services Ltd by NSE Data & Analytics Ltd, a 100% subsidiary of the National Stock Exchange of India Ltd. As a part of the transaction, the news department of Cogencis has been sold to Informist Media Pvt Ltd.

 

Informist Media Tel +91 (22) 6985-4000 

Send comments to feedback@informistmedia.com

 

© Informist Media Pvt. Ltd. 2024. All rights reserved.