The stock market is expected to open on a flat note on Thursday due to a lack of triggers, with most global markets being closed. Analysts anticipate stock-specific action in this lacklustre market, as the Gift Nifty at 23,845 signals a slightly negative bias.
In the derivatives space, there is indecision as the market reflects a balanced tussle between call and put writers. An equal addition in both call and put options has established a constrained range of 23,500–24,000, indicating a deadlock between market participants. The Put-Call Ratio has ticked up to 1.03, suggesting a slight shift towards bullish sentiment. Despite this, the “max pain” level at 23,800 indicates limited downside in the near term.
According to a market outlook report by Motilal Oswal Financial, India remains the fastest-growing economy among major nations, displaying resilience despite global challenges. Factors such as sustained growth, political stability, prudent reforms, infrastructure investment, healthy corporate finances, ample foreign reserves, controlled deficits, stable crude prices, and lower commodity inflation protect India from external shocks and position it for future growth.
While the past year saw a slowdown in earnings and consumption, rising global interest rates, geopolitical uncertainties, and high valuations in some sectors, the year 2025 is expected to see a gradual recovery in corporate earnings and consumption due to increased government spending and improved rural incomes. However, there may be volatility in global trade and currencies with the new US administration taking charge, and persistent inflation could affect anticipated interest rate cuts.
Valuations have moderated from the highs of 2024, with the 12-month forward P/E of Nifty-50 trading at 19.9x in Dec’24. Nifty-50’s EPS compound annual growth rate (CAGR) of 17% over FY20-25E has been higher than the index CAGR of 14% over the last five years. Earnings for Nifty-50 are anticipated to grow at an 11% CAGR between FY24 and FY26.
Despite challenges, the outlook for the Indian market remains positive, with growth expected in various sectors. Investors are advised to stay informed and keep an eye on market trends and developments to make informed decisions in the current economic landscape.
