A day after Diwali, the domestic markets are expected open marginally weak on Monday. Ahead of the US Presidential poll, markets are expected to remain lacklustre, said analysts. Gift Nifty at 24,320 against a Nifty futures close of 24,383 indicates that markets are expected to open on a flat note with downward bias.

Analysts expect trading activity to remain lacklustre till the outcome of the US election is known. However, select stocks will see action based on corporate information such as results, sales data and industry-related news.

The crucial US election outcome will determine the movement of domestic as well as global stocks. The election will be held on Tuesday and the results are expected by November 6-7.

“Global markets will respond to the US presidential elections for a few days, after which fundamentals like US GDP growth, inflation and rate cut by the Fed will influence market moves,” said Dr. V K Vijayakumar, Chief Investment Strategist, Geojit Financial Services.

Weak October

Vikas Gupta, smallcase Manager and CEO at Omniscience Capital, said: The global markets, including India, have been negative in October. This is most likely due to uncertainty related to the US elections. This is the most important factor. The second factor would be the FII tax-loss trade in December to book losses for the year. Finally, the January effect, which is a positive return for the markets in that month following the loss-selling in December.

“However, the most important factor is valuations of the markets. Nifty 50, based on the October 31, 2024 fact sheet, is at a PE of 22.58 and the Nifty 500 is at a PE of 26. The Nifty Midcap 150 is at a PE of 43, while the Nifty Smallcap 250 is at a PE of 32. Clearly, the large caps are available at a significant discount compared to the mid and small-caps, while the mid-caps are the most overvalued,” he said.

Large-caps attractive

It is clear that the obvious investment opportunity lies in the large-cap space. Of course, the small-caps could also offer lots of investment opportunities given that there are nearly 1,000 small-caps in the Indian stock markets. However, the mid-caps is where one has to be careful. With only 150 mid-caps, it is unlikely that one would find a lot of opportunity when the index itself is so overvalued.

“As far as sectors are concerned, the juiciest one for long-term value investors is the banking space, especially PSU Bbnks. But the private banks, too, are available at significant discounts to their intrinsic values. Besides this, the power sector, especially, select PSUs, and the IT sector, looks attractive from a long-term investment perspective,” he said

FPI selling

Dr. V K Vijayakumar, said: “The FPI sell figure of ₹1,13,858 crores through the exchanges in October, is the single highest absolute selling ever in a month by FPIs. This relentless selling contributed hugely to the about 8 per cent decline in benchmark indices from the peak.,

“In view of the elevated valuations in India, FPIs may continue to sell, thereby, putting a cap on any possible up-move in the market,” he said, adding that “another important trend in the sectoral moves is that despite the massive FPI selling in financials, this sector is resilient since the valuations are fair and every selling is being absorbed by DIIs and individual investors, particularly HNIs.”

Chandan Taparia, Head, Equity Derivatives & Technicals, Wealth Management, MOFSL, said: . “Sell on bounce mode continues in Nifty as the index struggles near the 24500 zone. The index was unable to cross the resistance of 24500 in the last four trading sessions. The index traded in a narrow range of 350 points throughout the week.”

On the options front, Maximum Call OI is at 25000 then 24500 strike, while Maximum Put OI is at 23500 then 24000 strike. Call writing is seen at 24300 then 24200 strike, while Put writing is seen at 23800 then 23900 strike. Option data suggests a broader trading range between the 23800 to 24500 zones, while an immediate range lies between 24000 to 24400 levels.

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