Benchmark stock market indices started the week on a positive note, driven by encouraging corporate earnings and overall optimism surrounding Q2 results. By 9:18 am, the S&P BSE Sensex had gained 87.27 points to reach 84,650.05, while the NSE Nifty50 was up by 24.50 points at 25,934.55. The broader market indices showed a mixed performance in the early trading session.
Dr. VK Vijayakumar, the Chief Investment Strategist at Geojit Financial Services, highlighted the significant improvement in profitability based on the Q2 results announced so far. He mentioned a 10.8% growth in net profits, marking the best performance in the last six quarters, surpassing previous estimates.
Looking ahead, Vijayakumar anticipated further strengthening of Q3 earnings, particularly driven by discretionary consumption. He emphasized that discretionary sectors like automobiles are expected to lead the earnings growth in the upcoming quarter, with a keen eye on whether the current consumption trend will persist post the festive season.
However, Vijayakumar noted the importance of foreign investments for the market to reach new highs, citing that the ongoing selling by Foreign Institutional Investors (FIIs) during market rallies has hindered a sustained upward trend. He suggested that a change in FII strategy could pave the way for the market to break into new record levels, with improved earnings performance from Q3 onwards potentially altering this scenario.
Prashanth Tapse, the Senior VP (Research) at Mehta Equities, pointed out the positive market sentiment following Nifty’s five consecutive days of gains and Bank Nifty’s rise for the sixth straight session. He attributed this optimism to the recent Bihar election victory of the NDA and the mild inflation rate of 0.25%.
Tapse mentioned that factors such as expectations of a US–India trade agreement, the resolution of the US government shutdown, and declining crude oil prices are bolstering market sentiment. Despite significant FII selling in recent days, Tapse expressed confidence in the index’s trajectory towards reaching new highs, with a focus on maintaining Nifty above the 25,600 mark to potentially target the all-time high of 26,277.35.
He anticipated traders to closely monitor the FOMC Minutes for insights into the Federal Reserve’s future actions. Tapse identified stocks like BEL, Sun Pharma, and Nykaa as attractive options on market dips, with BEL being his top pick for short-term momentum.
Amruta Shinde, a Technical and Derivative Analyst at Choice Equity Broking, advised traders to exercise caution amid global uncertainties. She recommended a selective approach of buying on market declines while emphasizing the importance of tight risk management.
Shinde suggested considering fresh long positions only above 26,100, with a focus on maintaining tight trailing stop-losses and partial profit-taking strategies. She stressed the need for vigilant monitoring of global developments to make informed trading decisions.