The domestic market is expected to begin the new week on a flat note amid a lack of triggers. Gift Nifty at 24,725 indicates that the Nifty could open about 50 points lower. Analysts expect the market to remain lacklustre with low investor participation. However, continuous support from foreign portfolio investors would help the market sustain gains, they added.
However, stocks outside benchmarks (Sensex and Nifty) will continue to see activity, they further said.
According to Krishna Appala, Senior Research Analyst at Capitalmind Research, “the broader markets witnessed a good recovery last week, with the Nifty 50 gaining 3.2 per cent, while the Midcap and Smallcap indices rose by 3.5 per cent and 3.3 per cent, respectively.”
A key highlight was the RBI’s decision to cut the CRR rate by 50 basis points to 4 per cent, injecting ₹1.1 lakh crore of liquidity into the banking system. Alongside this, the RBI revised India’s GDP forecast downward from 7.2 per cent to 6.6 per cent, he said, adding. FII also signalled a slow return, as data from the first week of December revealed a net cash market inflow of approximately ₹14,000 crore that comes as a welcome relief after the relentless selling pressure
However, according to him, challenges remain. “The Q2 GDP growth figure came in at a disappointing 5.4%, the slowest pace in seven quarters. The revised FY25 GDP guidance of 6.6% underscores the need for the government to ramp up capital expenditure in the second half of the fiscal year, following a lacklustre performance in H1FY25.”
Looking ahead, growth is expected to become increasingly scarce. In this environment, sectors and companies capable of delivering consistent, sustainable growth over the next 3–5 years will likely continue to attract premium valuations in the market, he further said.
V K Vijayakumar, Chief Investment Strategist, Geojit Financial Services,“FIIs turning buyers in early December, in total reversal of their sustained selling strategy during the last two months, has altered the market sentiments. In October the total FIIs selling through exchanges was Rs 113858 crores. In November the amount declined to Rs 39315 crores. In December, through 6th, FIIs have turned buyers having bought equity for Rs 17921 crores through exchanges. Including the purchases through the primary market, the total FIIs buying through 6th December stand at Rs 24453 crores (Source NSDL). This is a clear change in FII strategy in India. It can be argued that the stage of relentless FII selling is over.”
The FII strategy change is reflected in stock price movements, particularly in large-cap banking stocks in which FIIs have been sellers. “This segment has further room to go up since it is fairly valued and is growing at a reasonable pace. More domestic institutional and retail money are likely to move into this segment. IT is another segment which is likely to do well and attract more FII buying,“ he elaborated further.
Despite the positive undertone, analysts remain cautious about equities given macroeconomic headwinds.
Osho Krishnan, Sr. Analyst, Technical & Derivatives of – Angel One, said: the recent developments have certainly improved market sentiment, as key indices have shown a strong resurgence and have gained significant traction. “However, given the current movements, it is advisable not to become overly aggressive. Instead, waiting for dips could be a more prudent strategy at this time. Simultaneously, staying abreast with global developments, along with being selective with stock preferences, is advisable,” he said.
Meanwhile, Asian markets were mixed in the early hours of Monday. Japan and Taiwan markets were up, while Singapore and Korea markets were down.
