Can we expect up trend movements in the Indian market from now?

General
1

The current market data and analysis suggest that the Indian markets are equally ambivalent. It has pushed both Sensex and Nifty below their key supports – Sensex at 77,193 and Nifty at 23,354. Although the current situation is concerning, there are some interesting things about the same.

The market correction is not necessarily bad news. Valuations have gotten more reasonable after a fall from September 2024 highs. Nifty P/E is at about 20x from 23x. It means that a lot of quality stocks become available at more attractive prices for the long term wealth creation investor.

FIIs have been unloading heavily. In January alone, they were selling more than ₹12,000 crores. The good news is domestic investors (DIIs) are positive as they are putting in about ₹8,000 crore in the same period. This domestic support is very important for market stability.

There are also growth numbers that India’s economy is supposed to grow at a rate of 6.4% in FY 2024-25. The government’s concentration on infrastructure spending and its strong economic base make for a positive backdrop for the markets.

Here are some key points to watch:

  1. Support levels: Nifty’s crucial support is at 23,000
  2. The rupee is currently at ₹87.75/USD
  3. Market experts from Bernstein expect Nifty to reach 26,500 by year-end
  4. Corporate earnings growth estimates for FY2025 have been revised to 5% from earlier 15%

Even this weak market has strengthened the pharma and the IT sectors. Despite the current pressure, financial stocks have good prospects on the strength of improving credit growth and stable interest rates.

For those investors who are now going into the market, a staggered approach seems more reasonable. Weak Q4 FY2024-25 earnings and ongoing FII outflows will keep the markets volatile for a few weeks. Nevertheless, they expect the recovery to kick off from Q2 FY2025 with corporate earnings improving and world liquidity conditions easing.

It is impossible to time the market perfectly. Long-term investors who are able to hold short-term can look for good opportunities during the current correction. All you have to do is be extra careful with proper research, improve a diversified portfolio and invest according to your risk-taking ability and objectives.