Indian equity benchmark indices commenced trading on a negative note this Tuesday, mirroring weak signals from global markets. The BSE Sensex and the Nifty50 both opened in the red, as investors engaged in profit booking following the recent record-breaking rallies.
Opening Bell: Key Levels and Market Movement
At the opening bell, the Nifty50 was positioned above the 26,150 mark, while the BSE Sensex hovered near 85,500. By 9:24 AM, the Nifty50 was trading at 26,152.25, marking a decline of 24 points or 0.090%. Simultaneously, the BSE Sensex stood at 85,523.64, down by 118 points or 0.14%. This pullback indicates a pause as the market consolidates after scaling new peaks.
Expert View: Consolidation Before the Next Rally
Dr. VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services, provided his analysis of the current market phase. He stated that the market appears to be consolidating around the new record highs before attempting a breakout to fresh levels. He pointed to robust GDP numbers and strong indicators like November auto sales as fundamental supports for newer highs.
However, he highlighted the continuing weakness in the Indian rupee as a dampener, adversely affecting Foreign Institutional Investor (FII) flows. Dr. Vijayakumar noted that a fair trade deal between India and the US could help stem the rupee's weakness, but such an agreement has been pending for a long time.
For investors, he suggested using this period of consolidation to gradually accumulate fairly-valued large-cap stocks and growth-oriented mid-caps, which are likely to lead the next leg of the market rally. He cautioned that the small-cap segment remains overvalued. On a positive note, he expressed confidence in the Bank Nifty, citing valuation comfort and a pickup in credit growth as factors that could impart resilience to the broader market.
Global Market Context and Other Asset Classes
The weakness in Indian markets aligned with a mixed global backdrop. Asian equities showed modest gains in early trade, attempting a recovery from Monday's decline which was led by a downturn in cryptocurrencies.
In the United States, stock indices dipped on Monday. The decline was influenced by rising Treasury yields and manufacturing data revealing the impact of tariffs. Traders are now awaiting the Federal Reserve's upcoming policy statement next week for further direction.
In commodity markets, gold prices edged lower in early Asian trading on Tuesday. This followed a six-week high in the previous session, with profit-taking emerging as investors awaited comments from the Federal Reserve Chair and crucial economic indicators for clues on interest rates.
Oil prices, however, rose for the second consecutive session early Tuesday. Traders were assessing supply risks stemming from Ukrainian drone attacks on Russian energy facilities and escalating tensions between the US and Venezuela.
Investor Activity: FIIs Sell, DIIs Buy
The trading activity on Monday revealed a clear divergence between foreign and domestic institutional investors. Foreign Institutional Investors (FIIs) were net sellers, offloading shares worth Rs 1,171.31 crore. In contrast, Domestic Institutional Investors (DIIs) provided support to the market by being net purchasers, buying shares worth Rs 2,558.93 crore.
(Disclaimer: The recommendations and views expressed by investment experts are their own and do not represent the views of this publication. Readers are advised to consult certified experts before making investment decisions.)
