Equities are likely to sustain gains on the back of positive global sentiment and short-covering by foreign portfolio investors, said analysts. For the first time, after 22 sessions of selling, FPIs turned buyers (provisional data) on Tuesday, signalling that their selling may see a slowdown. Gift Nifty at 23,850 signals a gain of about 75 points for Nifty.

According to analysts, the market is expected to move in a narrow range with heightened intra-day volatility, and the focus has shifted to the RBI rate decision meeting (Outcome on Friday) and global factors. The market is expected to witness a gradual upmove in domestic equities with a focus on global markets, Q3 corporate earnings, and the RBI MPC meet outcome, said Siddhartha Khemka, Head - Research, Wealth Management, Motilal Oswal Financial Services Ltd.

Rajesh Bhosale, Technical Analyst, Angel One Ltd, said: geopolitical tensions amidst ongoing trade wars will continue to fuel market volatility. Additionally, domestic factors such as the MPC outcome and the Delhi state elections will be crucial in shaping market sentiment. Traders should stay vigilant and align their strategies accordingly.

The result season is almost over, and according to analysts, India Inc. has largely delivered in line with expectations.

The 3QFY25 earnings season has been largely in line with expectations, but forward earnings revisions remain weak, said Motilal Oswal Financial. “Downgrades outpace upgrades, suggesting that corporate profitability could face headwinds.

The Nifty-50 is now projected to post a modest 5% EPS growth in FY25E, a stark contrast to the 20 per cent+ CAGR seen between FY20-24,” the domestic brokerage said in a note.

Valuation is still remain high, said Motilal Oswal Financial. According to their analysts, despite recent market weakness, valuations remain elevated, with two-thirds of sectors currently trading above their historical averages.

The Nifty’s P/E ratio stands at 19.9x, marginally below its long-term average of 20.6x, while the P/B ratio (3.1x) reflects an 11% premium. This suggests that, despite near-term corrections, Indian equities remain expensively priced relative to historical levels.

Meanwhile, Asian stocks are trading in the green in early trade, following a positive overnight closing at the US markets.

Published on February 5, 2025