Indian stock indices opened higher on Friday, continuing their upward trajectory from previous sessions. This was primarily driven by a moderation in inflation in both India and the United States. Sensex and Nifty traded slightly above their previous day’s closing at the time of reporting, with Nifty sectoral indices showing a mixed trend. India’s retail inflation eased to a 12-month low of 4.75 percent in May, falling from 4.83 percent in April, as per government data. While this level is within the RBI’s comfort zone of 2-6 percent, it is slightly above the ideal 4 percent scenario. Inflation has been a global concern, but India has managed its trajectory well.
Chief Investment Strategist, V K Vijayakumar, mentioned that the market is likely to remain range bound in the near term until major triggers like the budget announcement. Given the high valuations, any significant upward movement may attract selling from FIIs. However, DIIs and retail investors are expected to follow a buy-on-dips strategy that has proven successful. Sustained flows into mutual funds, especially through SIPs, and the willingness of retail investors to buy on dips will keep the market resilient. Investors are advised to take a medium to long-term view and remain invested in fairly valued largecaps.
Ajit Mishra, SVP Research at Religare Broking Ltd, recommended focusing on stock-specific trading, particularly in sectors like agriculture, sugar, chemicals, and select defense stocks for long positions. Market participants will closely monitor the policy decisions of the new government, especially those related to finance under Nirmala Sitharaman’s guidance. She is expected to present the full Budget for 2024-25 soon, and her decisions will have a significant impact on market sentiment. Despite initial volatility around the Lok Sabha election results and profit booking, Indian stocks have recovered strongly, hitting record highs in subsequent sessions.
The bloodbath witnessed on the day of the election results when BJP fell short of expectations seems to be a distant memory now. The National Democratic Alliance (NDA) secured a comfortable majority, reassuring investors. Profit booking after the initial gains following exit poll predictions has been mostly recouped, with indices back at record levels. The smooth transition in government formation has bolstered market sentiments, leading to renewed investor confidence. Investors are suggested to keep an eye on government policies and budget announcements for potential market movements in the coming days. With a focus on stock-specific trading and a long-term investment perspective, opportunities in sectors like agriculture, sugar, chemicals, and defense stocks are worth exploring for potential returns.
