The benchmark Nifty 50 index for the Indian stock market is only a few points off its all-time high. The Nifty 50 reached its intraday high of 25,073.10 on Tuesday, August 27, which is only 5 points less of its all-time high of 25,078.30.
Investors are discussing whether to take advantage of the impending new record high as a buying opportunity or to lock in profits. The absence of fresh stimuli on the domestic market, which seems to have priced in important elements like a possible September rate decrease by the US Federal Reserve, is the cause of this uncertainty. In the meanwhile, negative factors including stretched valuations, weak quarterly profits, and geopolitical tensions continue to affect sentiment.
The price-to-earnings (PE) ratio of the Nifty 50 is currently 24.5, higher than its one-year ahead PE of 20.8, per Bloomberg data. At 4.03, the price-to-book (PB) ratio is currently higher than its one-year future PB of 3.23.
Although the Nifty’s valuation is high, experts argue that this does not mean there are no chances in the market because the valuation is not at alarming levels.
asked a number of fundamental and technical specialists for their opinions on the short-term prospects of the market and advice on what investors should do right now. They stated the following:
Core beliefs
Geojit Financial Services’ Chief Investment Strategist, V K Vijayakumar
The US Fed rate decrease in September appears to have been partially priced by the market, but the RBI rate cut at the upcoming policy meeting in October has not been fully priced.
This could act as a major catalyst for the stock market in India. A reduction in the RBI rate can help banking stocks since, despite the banking industry’s difficulties with deposits, the valuation of these equities is still below historical average.
Rate cuts are expected to significantly boost banks’ bond holdings, which will be a positive development. Additionally, as bond yields decline in the US, inflows into emerging markets, including India, are likely to increase. There is a strong possibility that the Nifty 50 index could surpass the 26,000 mark this year.
Manish Chowdhury, Head of Research at StoxBox
Notes that with the Nifty 50 trying to maintain levels above the 25,000 mark, the benchmark must close above its previous highs to signal further upside convincingly.
Furthermore, an anticipated interest rate cut in the US in September positions Indian equities favorably for increased foreign inflows in the near future.
We anticipate more momentum and won’t be shocked to see the index close to the 26k milestone in the September series, as heavyweights in the Nifty 50 index continue to display resilience.
Additionally, growing domestic involvement along with waning concerns of a worldwide geopolitical conflict escalation will sustain stocks in the near run.
Technical perspectives
Shrikant Chouhan, Kotak Securities’ Head of Equity Research
The third time that Nifty has breached and maintained above the 25,000 mark, the market is clearly receiving significant support from a number of sectors.
In addition to domestic variables that are favorable, the present market rise is strengthened by global macro forces.
Technically speaking, it is anticipated that the market will soon move towards levels of 25,300–25,500.
The support levels are now 24,800 instead of 24,500. The IT and Bank Nifty indices, which are both quite important, support the strength of the market as a whole and might help move the indices closer to 25,300–25,500.
Ideally, one should purchase at the 24,950–24,900 level on declines. But beyond 25,300 levels, it’s wise to cut back on weak long bets and concentrate on particular equities.
Osho Krishan works for AngelOne as a senior analyst for technical and derivative research
In the current series, we are seeing significant Call and Put writing at the same strike of 25,000. During the next two trading sessions, short covering can occur.
The general trend is encouraging, but a strong movement is required before the expiration date. This may potentially occur tomorrow due to the Bank Nifty’s expiration.
The market may see a breakout, following which the Nifty 50 may rise by roughly 250–300 points. Since the Bank Nifty is on a reversal trajectory, it is the main subject of attention.
The Bank Nifty may see significant change, which might provide the Nifty 50 a hefty boost. The Nifty 50 could reach 25,300 within the next one to two trading weeks.
CEO and founder of SAS Online, Shrey Jain
Except for August 6, the Nifty 50 index has remained above the crucial 24,000 mark during the recent slump.
The top objective is 25,500 if the index closes at a new high today. If the Nifty 50 index closes below 25,000, it can reach 24,600 or 24,300. Most likely, these levels will provide support.
New purchases can be made at the support levels. At this point, stay away from taking large short positions in the Nifty 50 index.
