Market to remain positive despite confused global signals

The beginning of a fresh series (July introduction today at the NSE derivative segment) will see domestic markets opening flat on Monday.

Despite US stocks closing deep in the red, Asian shares rose on Friday as all eyes are on the Bank of Japan’s policy decision later in the day, and the weak yen. US stock futures, too, recovered after tech giants Alphabet and Microsoft reported better-than-expected quarterly results. However, Australian stocks are down over 1 per cent in early deals on Friday.

Gift Nifty at 22,691 indicates a flat-to-positive opening, as Nifty May futures closed at 22,654.

Neeraj Sharma, AVP Technical and Derivatives Research, Asit C Mehta Investment Interrmediates Ltd, said bulls kept their grip on Dalal Street on F&O expiry day, continuing the rise for the fifth consecutive session in a row.

India VIX rose by 4.42 per cent to 10.73, with expectations of volatility in the short term. Volatility increased as traders rolled over holdings in the F&O segment from the April to May series. The Nifty small cap index has registered a record high, while the midcap index is still 1 per cent away from its previous high.

According to Om Mehra, Technical Analyst, SAMCO Securities, sentiment is exuberant, and this rally might also continue for the next trading session. Large caps may now see more strength after decent consolidation

Poll & Market

Meanwhile, domestic brokerage Prabhudas Lilladher, in its latest India Strategy Report – Democratic Hat-trick to Re-Rate Markets – said Indian Nifty is expected to scale up to 25,810 by December 2024. “The upward mobility in Nifty is attributed to the continuation of the NDA government and the La Nina-led normal monsoons, which are expected to provide stability in policies and boost demand economic growth,” it added.

Nifty is currently trading at 18.3x 1-year forward EPS, which is at a 3.7 per cent discount to the 15-year average of 19x. On the base case, PL values Nifty at a 15-year average PE (19x) with March26 EPS of 1358 and arrives at 12-month target of 25810 (25363 based on 18.9x Dec 25 EPS of Rs1342 earlier).

Bull Case, PL values NIFTY at 5% premium to 15-year average PE 20x (6% premium earlier) and arrive at bull case target of 27100 (26885 earlier). Bear case, NIFTY can trade at 10% discount to LPA with a target of 23229 (22066 earlier).

Traders in the derivative segment should keep in mind that several stocks and Nifty lot size been reduced from today. Nifty lot size has been cut to to 25. Stocks that will see a revised lot size can be viewed at this link.