Next week, will be truncated on account of Guru Nanak Jayanti on November 19.
This week, benchmark Nifty50 and BSE-Sensex clocked gains of little over 1 per cent aided by strong buying from retail investors and short-covering by traders. Much of those gains in the market this week came today as the headline indices closed over 1 per cent higher driven by short covering.
While concerns surrounding faster-than-expected rollback of accommodative monetary policy by the US Federal Reserve have dampened sentiment, analysts believe another quarter of above par earnings from corporate India should help in the recovery of risk appetite.
Further, the recently announced changes in the MSCI indices should also ensure inflows of fresh US dollars from global exchange-traded funds, said dealers.
That said, any upside in the market is likely to be limited given worries that investors may have run ahead of themselves in pricing in the best-case scenario for earnings growth after a strong festive period in the country.
“We believe the risk-reward for Indian equities is less favorable at current levels. While we expect strong cyclical and profit recovery next year and remain medium-term constructive amid increasing digitalization in the index, we think the recovery is well priced at current peak valuations,” brokerage firm Goldman Sachs said in a note today as it downgraded Indian equities to “market-weight”.
Goldman Sachs has joined UBS Securities and Morgan Stanley in downgrading their stance on Indian equities after their stellar returns in 2021.
Market participants expect the broader market to continue to their recent outperformance driven by buying from retail investors. The Nifty Midcap 100 and Nifty Smallcap 100 index rose 1.1 and 1.3 per cent, respectively, this week.
Shares of consumer-facing companies will remain in favour as investors expect a strong December quarter performance due to the ongoing rebound in consumer demand. Further, domestic economy-linked stocks will remain in favour as economic growth continues to gather steam due to the rising vaccination rate in the country, said analysts.
“The rally that seemed like a sprint, turned out to be a relay with sectors running up and consolidating consecutively. Therefore, positional investors in their quest to generate alpha, should observe such sectoral performances and position their bets accordingly,” said Yesha Shah, head of research at Samco Securities.
On the technical side, analysts said that the Nifty50 has to sustain above 18,150-mark for another two sessions to make a move towards 18,400 and 18,600 points. “This will also take out the upper end of the current range which will add further momentum to the index,” said Manish Hathiramani, technical analyst at Deen Dayal Investments.
