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Markets Near Highs, But Traders Show Hesitation
27 Nov
Summary
- Indian markets rallied close to record highs, influenced by global trends.
- A weaker dollar and expected US rate cuts are boosting emerging markets.
- Derivatives data suggests trader caution ahead of key US and India events.
Indian stock markets approached record highs on Wednesday, mirroring a broader global rally spurred by a weaker dollar and optimism surrounding potential US interest rate cuts. Major Indian companies such as HDFC Bank, Reliance Industries, and ICICI Bank were prominent gainers, contributing to the upward momentum. The dollar's recent decline has made emerging markets, including India, more attractive to foreign investors, though significant outflows were noted earlier in the year.
Despite the positive market movement, a closer look at the derivatives market reveals a degree of caution among traders. Lower-than-average rollovers for Nifty and Bank Nifty futures suggest a 'wait-and-see' approach as investors await crucial decisions from the US Federal Reserve and developments on the anticipated India-US trade deal. This cautious sentiment is further influenced by upcoming primary share offerings totaling ₹30,000 crore, which are expected to increase market volatility.
Analysts are observing market valuations, with the Nifty currently trading at 18x FY28 earnings, within its historical band. Predictions range from a potential dip to 23,200 if a trade deal falters, to a surge towards 29,000 if one materializes. Technical indicators suggest that a sustained move above 26,300 could trigger a fresh rally, but overall, traders seem hesitant to carry strong positions forward until more clarity emerges on these key economic and geopolitical fronts.
