Domestic markets are expected to open sharply higher on Friday ahead of the Union Budget. Fresh monthly F&O contracts on the NSE are expected to begin on a positive note as Nifty trading at Gift City indicates a gain of at least 200 points. Analysts expect short-covering would lift the market due to its oversold position.
Extreme FII shorts & oversold conditions may trigger a bounce in heavyweights, said Nuvama Alternative & Quantitative Research. “Indian equities are deeply oversold due to a broad market sell-off. FIIs hold an extreme short position (89 per cent shorts vs. 11 per cent longs). Historically, such set-ups trigger sharp short-covering rallies, potentially driving a 3-5 per cent bounce, especially in FII-heavy sectors like Private Financials, where attractive valuations and domestic inflows add support. Nifty could aim for 23,750,” it added.
- Also read: Stocks that will see action today: January 31
As we near the Union Budget session, it is anticipated that the market will experience fluctuations and increased volatility. ”Investors are encouraged to adopt a focused, stock-centric strategy, carefully evaluating individual stocks, rather than trying to time broader market movements,” said Osho Krishnan, Sr. Analyst, Technical & Derivatives of – Angel One
Siddhartha Khemka, Head – Research, Wealth Management, Motilal Oswal Financial Services Ltd., said: FPIs have offloaded Rs 81,600 crore worth of Indian equities in January till date, the second-largest monthly outflow on record after October 24, as elevated US Treasury yields and lacklustre domestic earnings deterred foreign investors.
Investors will closely track Budget-related developments, with focus on capex and consumption linked sectors, he said
Key quarterly results to be announced tomorrow, include those of Sun Pharma, ONGC, Nestle, Vedanta, and IndusInd Bank, amongst others. “We expect the market to trade within a broad range, with stock/ sector specific action ahead of the Union Budget and ongoing Q3 results, he added.
“Top Longs: Axis Bank, HDFC Bank, Kotak Bank (with IIB as a hedge) + Industrials like Polycab, Siemens, and Havells. In autos, Hero MotoCorp is a strong long, while Eicher can be a relative short. IT remains our top short bet,” Nuvama said in the note. Small & Midcaps are likely to underperform unless stronger HNI participation emerges, it further said.
Meanwhile, the little cues available from the Asian markets are mixed, even as US stocks ended in the green overnight.
