Indian equities to open flat with negative bias on valuation concerns

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Domestic markets are expected to open on a flat note with a negative bias. Analysts expect large-cap stocks to remain in consolidation mode, while mid-and small-cap stocks will remain under pressure due to valuation concerns. 

The US Federal Reserve rate cut to revive rural theme expect analysts. Emkay Global Research, in a strategy report, said: “We expect the RBI to follow the FED’s suit in either Oct-24 or Dec-24, with rate cuts and a shift toward an accommodative stance on liquidity. The deep 50 bps cut by the Fed, extended by another 50bps by end-CY24, could force its hand to exert excessive upward pressure on the INR.”

According to Emkay Global Research, “We are observing initial signs of a revival in mass and rural consumption despite the overall weak demand. This assessment is informed by management insights, Nielsen trends, increased welfare spending by states post-elections, and decreasing inflation. Conversely, premium consumption faces challenges, likely due to tighter unsecured credit and job losses in white-collar sectors during the second half of FY24. We recommend capitalising on this trend, particularly in the FMCG sector, despite high valuations, with value retail also likely to benefit.

Gift Nifty at 25,525 signals a marginal gain at open. Following strong gains in US stocks overnight, most Asian stocks rule in the green.

However, technical analysts are over the condition.

“Technically, the index formed a Shooting Star-like candle stick pattern on a daily scale near its all-time high, signalling exhaustion of buying pressure or some short-term profit booking in the index. Therefore, on the upside, 25,600-25,620 will act as an immediate hurdle for Nifty. If the index sustains above 25,600 strongly, it could test the 25,750 levels in short term. On the downside, 25,280-25,300 serves as immediate support base for Nifty followed by 21-DEMA support, which is placed near 25,120 levels. As long as Nifty stays below 25,620, a “Sell on Rise” strategy is advisable for traders,” said  Hrishikesh Yedve, AVP Technical and Derivatives Research at Asit C. Mehta Investment Interrmediates Ltd.