Nifty futures indicate a modest upside, with the gauge likely rebounding from a seven-month low. — Bloomberg
NEW DELHI: Stocks are expected to stabilise after Monday’s bruising sell-off that pushed the main indexes to the edge of oversold territory.
Nifty futures indicate a modest upside, with the gauge likely rebounding from a seven-month low.
Retail chain DMart’s earning miss after a strong quarterly update has investors wary about pinning too much hope on the ongoing results season.
Equity investments in India’s real estate hit a record US$11.4bil in 2024, with most property developers reporting robust earnings and sustained demand for homes.
Yet, the National Stock Exchange realty gauge closed at its lowest level in over nine months after tumbling 6.5% on Monday.
Analysts say home prices are beginning to stabilise, which means future earnings growth will depend on higher volume sales. The catch, they warn, is when prices cool, so does demand, triggering a vicious cycle of falling prices and weakening demand.
Most segments of the stock market remain overvalued despite the steep correction in the main equity indexes, warns Kotak Securities.
Part of the reason, it says, is that mom-and-pop investors continue to “believe any random narrative” surrounding stocks and sectors, often unmindful of the business model and fundamentals.
Kotak believes many of the so-called “narrative stocks” still have significant downside when measured against their true value.
The scary part, Kotak noted, is that retail investors are the largest shareholders in many of these companies, second only to the founders.
The rupee’s sharp drop of late is prompting analysts to speculate that the Reserve Bank of India (RBI) is adopting a more hands-off approach to currency management, allowing global market forces to dictate its moves.
The rupee has already shed 1.1% in the first 10 trading days of the year, compared to a 2.9% drop over all of 2024.
Analysts from HDFC Bank, Kotak Mahindra Bank, and global firms like Gavekal and MUFG Bank predict further weakness, as the RBI appears to be going easy on defending the rupee. —Bloomberg
