A whopping ₹9,010 crore worth of buying in cash markets by foreign portfolio investors (FPIs) on Wednesday took the Sensex past the 63,000 mark. The Nifty, too, made a new lifetime high of 18,816. Analysts say markets are factoring in a massive win for the ruling BJP in upcoming Gujarat State polls, results of which will be declared on December 8.

Cash market volumes on the National Stock Exchange (NSE) touched ₹94,000 crore. In the month of November, FPIs have bought stocks worth ₹22,546 crore in the cash segment. On the other hand, domestic institutional investors (DIIs) have been sellers to the tune of ₹6,300 crore this month. On Wednesday, they sold stocks worth ₹4,056 crore.

Six stocks — Varun Beverages, Tube Investments, Indian Hotels, Bajaj Holdings, TVS Motors and ABB India — were included in the MSCI index. These stocks are expected to attract millions of dollars in inflows given that FPIs will buy them compulsorily if they have pegged their investments to the MSCI index.

Warning signs

Analysts say in case of no major fall in the market in December, the year 2022 will be the seventh consecutive year of positive return for Nifty — longest such streak. Although a lower GDP print did not impact the markets, analysts are taking it as a warning sign. Rahul Arora, CEO — Institutional Equities, Nirmal Bang, says market valuations are not justified now and a major fall would come.

“Market rally could slow down. I will not be surprised if the Nifty falls to around 15,000 levels during the first half of 2023. Slowing global GDP will lead to earnings downgrade for most major world economies, India included. In such a situation, there is no way that we can justify current market valuations. Domestic funds are already being cautious. Small- and mid-cap stocks are expensive in value currently but that said, they will lead the next leg of market rally (after the anticipated fall),” Arora said.

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