“Looking ahead, it will be interesting to monitor Foreign Institutional Investors (FIIs) and their flow into India. September saw the highest FII inflows into Indian equities this year. However, with the Chinese market trading at nearly half the valuation of Indian equities, there may be a tactical shift of flows towards China after the recent stimulus. It’s important to note that 95% of foreign inflows to India come through the Emerging Markets ETF route, which means any uptick in flows to China could also lead to continued foreign investments in India,” added Meena.
Domestically, liquidity remains robust, with signs of sectoral rotation from overvalued segments to areas with more attractive valuations. Meena said, “From a technical perspective, the Nifty continues to exhibit strong bullish momentum. Key resistance levels to watch are at 26,277, 26,575, and 26,800. On the downside, the 26,000–25,800 zone serves as a strong demand area. As long as Nifty remains above the 25,800 mark, the bullish trend is likely to stay intact.”
Going ahead, global factors will play a pivotal role, especially with the absence of any major domestic events, said Ajit Mishra – SVP, Research, Religare Broking Ltd.
“Auto sales data, set to be released from October 1, will be a key focus, along with important economic indicators such as HSBC India Manufacturing PMI and HSBC India Services PMI. Additionally, trends in foreign fund flows and crude oil price movements will be closely watched, as they could influence market sentiment,” Mishra said.
Vinod Nair, Head of Research, Geojit Financial Services said that a risk to the rally is elevated valuations. Given the stimulus and attractive valuations like China, FII are inclined to eastern Asian peers. Looking ahead, investors will be focusing on the Q2 earnings, with an anticipation of an improvement in earnings outlook, he added.
