After falling for three consecutive days, Indian markets are expected to show some resistance on Friday. SGX Nifty indicates an opening gap of 70 points for Nifty.
Analysts said although the major benchmarks move in a narrow range, some depreciated meters in the mid and small cap space could see some value buy at lower levels. However, with valuations remaining tight, the recovery might not be one-sided, they warned, as second-quarter results and some of the management’s comments signal pressure on entry costs.
The lack of institutional buying is a major concern, analysts said. In October alone, domestic REITs and institutional investors sold shares worth nearly $ 2 billion. On Thursday alone, REITs sold shares worth 2,818 crore, bringing their sale to 7,172 crore in October. On the other hand, DIIs, which became net buyers for the first time in the past 8 days, were sellers to the tune of 5,986 crore in October.
Binod Modi, chief strategy officer at Reliance Securities, said the September quarterly earnings released by some consumer companies showed pressure on margins driven by rising input costs despite healthy earnings. This, along with moderate comments from various directions over rising input costs, weighed on sentiment, raising concerns about the sustainability of earnings growth, he said.
“In addition, a strong market rally in the recent period has made the risk-reward proposition a little unfavorable, which has also triggered the recognition of earnings. Mid-cap stocks have remained under extreme pressure due to growing apprehensions about profits, ”he added.
Mohit Nigam, Head of PMS, Hem Securities, said the broader market is seeing a sell off relative to benchmarks as we can say that some stocks that have rebounded massively over the past month and are trading at low prices. Significantly stretched valuations had recorded significant profits. reservation within the last 2-3 days.
“The benchmarks saw massive sell-offs for a third consecutive session. We believe that the profits recorded are healthy for the market and any significant drop is a good opportunity to accumulate quality stocks, ”he added.
SGX Nifty currently reigns at 18,270 against Nifty futures Thursday at 18,203. US equity indices were mixed on Thursday with the Dow Jones Industrial Average finishing flat while the S&P 500 and Nasdaq Composite gained.
On Friday, most Asian stocks are mixed, with marginal gains or losses.
Nagaraj Shetti, technical research analyst, HDFC Securities, said a long negative candle has formed with a lower shadow, indicating an emergence of buying interest from the lows. It also signals the possible completion of the recent downward correction in the market.