Amid mixed global cues, domestic markets are expected to open on flat note. At 22,370, Nifty futures in Gift City signals a flat-to-positive opening against Nifty futures closing of 22,308 .
However, the unabated selling by foreign instistuional investors is a cause for concern, said analysts. According to them, with the lack of triggers, activity will be centred around individual stocks.
FPIs remained net sellers for the ninth consecutive session on Tuesday. They offloaded stocks worth ₹4,065.5 crore, according to provisional data from the exchanges.
Accordinig to Vinay Paharia, CIO, PGIM India Mutual Fund, “While mid- to long-term economic and earnings growth prospects remain healthy, we need to be careful to avoid pockets of over-exaggeration of longer-term growth.”
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The strong market rally has led to valuation expansion for strong and weak long-term growth companies alike, in some cases more so in the case of the latter, he said.
“While we don’t mind paying for structural long-term growth, we certainly would like to avoid growth which is cyclical, and of poor quality. In general, returns may be dictated by earnings growth rather than valuation multiple expansion, and it may be best to stick with investments offering the ‘higher for longer’ growth earnings visibility,” he further said.
The bi-decadal exercise of the elections are currently in progress, and political stability and positive policy environment along with necessary capex thrust is what markets would seek in the long-term, he added.
Meanwhile, Asian stocks are mixed; while Japan, Australia and Taiwan markets are up, equities in Hong Kong, China and Singapore down. Overnight, the US stocks ended flat but in positive zone.
Ashwin Ramani, Derivatives & Technical Analyst, SAMCO Securities, “Nifty continued its bullish momentum and moved up steadily throughout the day to close 114 points higher at 22,218. The India VIX closed in red for the first time in 14 trading sessions. The cooling off in the volatility index gave comfort to the bulls. The fear index closed 1.97 per cent lower at 20.19.”
All Strikes from 21,800 until 22,200 saw call writers (Bears) exiting and put writing, which led to a steady up move in the Nifty, he observed. The maximum put open interest is now placed at the 22,000 Strike, which will act as an immediate support for Nifty. If call writers exit from the 22,200 Strike, Nifty is likely to move higher, he said.
According to Mandar Bhojane, Research Analyst, Choice Broking, an analysis of Nifty put options reveals a concentration of Open Interest (OI) at the 22,000 level, implying potential support at this level. On the Call side, significant OI concentrations are observed at the 22,500 and 22,600 levels, nearing all-time highs.”