Indian markets open higher despite global weakness; Valuations concerns persist amid FII selling: Experts

NEW DELHI: Indian markets opened in green on Wednesday, defying weakness across major global peers, even as experts cautioned that valuations remain a concern amid continued foreign investor selling. The BSE Sensex climbed 284.92 points, or 0.39 per cent, to 74,203.68 points, while the NSE Nifty 50 gained 82.75 points, or 0.36 per cent, to 23,324.85 points in early trade.

The positive opening followed firm cues from the GIFT Nifty, which traded 106.50 points or 0.46 per cent higher at 23,291.00 points. The gains came despite a broader sell-off across global markets. Commenting on market trends, VK Vijayakumar, Chief Investment Strategist at Geojit Investments Limited, said the market is likely to overlook the recent escalation of tensions in West Asia.

“The market is likely to largely ignore the escalation of the conflict in West Asia as a one-off. The softness in crude prices indicates that. Despite the escalation, Brent crude continues to trade below the USD 93 level,” Vijayakumar said.

He also highlighted a shift in global investor sentiment towards artificial intelligence-linked stocks. “A significant trend in global markets is the fatigue that is creeping into the AI trade. FIIs appear to be increasingly cautious about the concentration risks associated with the AI-related trade in South Korea and Taiwan. But this has not yet reflected in the FIIs looking at Indian stocks, where they continue to sell,” he added.

According to Vijayakumar, Indian equity valuations remain elevated despite the recent correction. “Even though the Indian market has corrected, the fact remains that the valuations are not yet attractive. Nifty at around 20 times earnings is fairly valued, but not attractively valued. Nifty Midcap Index at 29 times earnings and Nifty Smallcap Index at 33 times earnings are expensive,” he said.

He noted that stronger growth prospects in the broader market continue to support premium valuations but added that the gap between large-cap and broader market valuations is likely to persist due to sustained foreign portfolio investor (FPI) selling. “Given the sustained FPI selling, the valuation differential between the large caps and the broader market is likely to sustain in the near term. The situation will change when FPIs turn buyers in India,” Vijayakumar stated.

Meanwhile, market experts remained optimistic about near-term technical levels. “We believe that the 23,100/73,500 zone will act as a crucial support level for day traders,” said Shrikant Chouhan, Head of Equity Research at Kotak Securities.

“As long as the market trades above this level, the pullback formation is likely to continue, with the index potentially moving towards 23,450-23,500 / 74,500-74,700 on the higher side.” However, he cautioned that a breach below the support zone could trigger fresh selling pressure.

In global markets, US equities ended lower overnight. The Nasdaq declined 250.84 points, or 0.97 per cent, to 25,678.82 points, while the S&P 500 fell 19.08 points, or 0.26 per cent, to 7,386.65 points. Dow Jones Futures were also down 114.43 points, or 0.22 per cent, at 50,757.68 points.

Asian markets mirrored the weakness, with Japan’s Nikkei 225 falling 1.41 per cent and South Korea’s KOSPI dropping 4.18 per cent in early trade. Taiwan’s benchmark index and Hong Kong’s Hang Seng also traded lower.

In commodities, Brent crude slipped USD 0.24 to USD 92.16 per barrel, while crude oil futures fell 0.30 per cent to USD 88.86 per barrel. Gold prices also declined by 0.99 per cent. (ANI)