Gift Nifty indicates a flat to negative start for domestic markets on Monday. Following scathing reports against Hindenburg that directly accused SEBI chief Madhabi Buch, traders are a little nervous. However, analysts do not expect the report to have a big impact on the market.

Nifty futures at Gift City is ruling at 24,360, against Friday’s closing value on NSE at 24,401.50, signalling that the Hindenburg report will not have much impact on Indian markets.

The markets regulator on Sunday asked investors to remain calm and exercise due diligence before reacting to reports such as that by the US-based short-seller Hindenburg Research.

Hindenburg on Saturday alleged that the Chief of Securities and Exchange Board of India (SEBI), Madhabi Puri Buch, previously held investments in offshore funds also used by the Adani Group. SEBI, Madhavi Buch, and her husband denied any wrongdoing and said they were transparent.

Samir Arora of Helios Capital, in his X post said: ”Pl don’t waste yr time making a list for some big fall. There is no logic for substantial fall or in fact any fall other than normal day-to-day volatility - this is my view. That is all.”

According to analysts, this week being a curtailed trade week due to a public holiday on August 15 (Independence Day), volumes are likely to be low. However, with most companies having declared their results, there will be few cues for the market on the domestic front. Global sentiment will impact the market in the short term, they added.

Meanwhile, the Asia-Pacific markets are mixed. While Singapore and Chinese stocks are down, Australian equities moved up marginally in early deals on Monday. The Japan markets are closed today.

Analysts believe sector rotation and profit-booking at higher levels will continue due to ‘pricey’ Indian stocks.

Despite elevated valuations, according to Elara Securities, “Giving the benefit of doubt to the prevailing bull market trends, we would give high scope of a bottoming process that paves the way for resumption of the bull market.”

Every shakeout re-calibrates the bull market, resulting in an important character change for the next phase, it said, adding that . “recently, we have seen green shoots of a rotation from the extreme frontline to the broader market for the US equities. The next phase of the bull market would mostly have this character change. “

In India, it is mostly the reverse< with the alpha of midcaps being challenged already at a multi-decadal barrier. “We note this accentuates the likelihood of midcap alpha stalling rather than a top for the absolute trends. Another possibility is the likelihood of a huge rotation within the midcap space. Smallcap alpha has room left, before hitting a long-term barrier. Hallmark of the next big move could be large-cap alpha. This means huge impact on the Nifty; the key reason for our melt-up call,” it further said.

However, continuous selling by foreign portfolio investors will give some anxious moments, said analysts.

 Dr. V K Vijayakumar, Chief Investment Strategist, Geojit Financial Services, said: “Globally stock markets witnessed a sharp correction for the week ended 9th August. The correction was triggered by the unwinding of the yen carry trade and recession fears in the US. FIIs resorted to big selling in the cash market. The selling in the cash market amounted to Rs 19544 crores in the first 4 days on the week. But on Friday when the market stabilised FIIs tuned buyers, though for a limited amount of Rs 406 crores. 

For the fortnight ending 31st July, FIIs were sustained sellers in financial services. This partly explains the weakness in financial services segment in the market now. FIIs, during this period, were buyers in IT, autos, capital goods and metals. 

Going forward, if the market continues to rise, FIIs are likely to press more sales since Indian stock valuations continue to remain elevated, particularly in relation to valuations in other markets.”

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