ET NEWS

Mumbai: Amid the din over foreign selling, Donald Trump's economic broadsides and slowing growth, one detail seems to have slipped under the radar: the Sensex and Nifty are just around 4% shy of record highs. The recent climb hasn't been dramatic-September has brought small, steady gains rather than fireworks, while the Volatility Index, or VIX, has sunk to a record low of 9.89, showing how calm traders seem to be about risk. And yet, there's little sign of euphoria. Investors are stuck with the paradox: valuations look stretched, the risk-reward trade-off feels poor, and still prices keep inching higher.This would not be the first time India's equity market wrong-footed sceptics and critics. Seasoned investors have warned repeatedly over the past year that indices are stretched, pointing to elevated valuations and slowing growth. Yet, share prices have continued to hold up and even edge upwards.It is a familiar paradoxWhen investors are positioned conservatively, even scraps of moderate good news can set off rallies because there's hardly any selling to cap the move. In September, that is what is playing out. Receding foreign selling along with the structural weight of monthly flows into equity mutual funds from domestic savers has ensured a constant bid up for stocks.The result has been benchmarks edging higher in a steady, unspectacular fashion. It may also explain why the recent upmoves have gone largely unnoticed among Dalal Street participants, who often associate breaking records and milestones with full-blown rallies.If foreign selling merely abates rather than reverses, the weight of domestic liquidity could drive benchmarks another 10% to 15%, say money managers. Large-cap stocks are best placed to lead such a push.That said, any breakout will face its own tests. Donald Trump has continued to target India on trade and immigration, with the latest move hitting H-1B visas. The eventual impact on IT services demand will be felt, and technology is one of the two pillars of the Sensex and Nifty, the other being banks. Foreign investors have already offloaded IT shares worth about ₹62,000 crore so far this year-the heaviest sectoral selling. That creates an overhang even as valuations in the sector adjust.Liquidity vs valuationsAs liquidity takes precedence, this market may be better suited for the nimble-footed. Meanwhile, conservative voices often get trapped by focusing on headline valuations or macro risks, underestimating the power of liquidity and missing out on late, yet sharp, rallies.As Michael Lebowitz, portfolio manager, Real Investment Advice, said on VettaFi: "In the long term, high valuations often predict poor returns. However, in the short term, expensive valuations can become even more expensive."In India, even as liquidity keeps markets afloat, nagging concerns over valuations continue to linger. The country's nominal GDP growth has slowed to 8-9% from 11-12% in earlier years, and equity return expectations have moderated accordingly. This mismatch between growth and price explains why long-term foreign capital has flowed into cheaper markets such as China.This tension means that while short-term flows may support Indian equities, long-term allocations from global investors are likely to be more measured. That's the thing with high valuations: they do not cause an immediate fall, but they do make the risk-reward look tricky and the rally harder to trust.Paradoxical as it may sound, record valuations do not mean markets would not rise further immediately. The catch is, lofty valuations almost always mean thinner returns over the long haul. The investors who manage to live with that ambiguity are the ones who keep their portfolios ticking. And, they are often in the minority.Gold vs EquitiesIn the meantime, many seasoned investors have found a better way of keeping their portfolios moving without having the guilt of buying costly equities: Gold. The reassessment of risk is evident well beyond India. Morgan Stanley's chief investment officer Mike Wilson recently suggested a 60:20:20 portfolio split: 60% equities, 20% bonds and 20% gold. It marks a sharp departure from the classic 60:40 model (equities-bonds) that has dominated investing for decades.A 20% allocation to gold is unusually high for portfolios and would show how investors have become wary of relying on equities alone to generate inflation-beating returns.The irony of any sharp upmove in equities is that it will be met not with celebration, but with a mix of scepticism and the nagging fear of having missed out. It is also a reminder that markets often rise on hesitation, leaving equity enthusiasts unsure whether to cheer the highs or worry about what could be in store after that.

Nifty logged its third straight week of gains, breaking out of a 4-month range and closing above key swing levels, but analysts caution the index now faces stiff resistance at 25,500–25,670. While support at 25,000–25,200 remains firm, near-term sentiment could be tested by developments around US visa costs.SAMEET CHAVAN HEAD RESEARCH – TECHNICAL & DERIVATIVES, ANGEL ONEWhere is Nifty headed? Nifty surpassed the psychological level of 25,000, confirming a ‘Double Bottom’ formation on daily charts. Although risks remain, certain technical indicators are providing encouraging signals. Price-wise, we see a clear ‘Higher High, Higher Low’ formation, which is bullish. The RSI-smoothed oscillator on the daily timeframe has crossed 70 and is trending northwards, which generally adds momentum to the rally. We remain optimistic and expect Nifty to soon challenge the important swing highs of 25,548 and 25,670. On the downside, 25,250 followed by 25,000 should be treated as strong support zones. Trading strategies for the week: Over the weekend, the US President made announcements regarding H-1B visas, which could dampen sentiment across the IT space. In case of any knee-jerk reaction, the support levels mentioned above could provide a cushion in the week ahead. Traders are advised not to get carried away and instead use declines to add long positions. Samman Capital: Appears to have emerged from a prolonged consolidation, forming a Bullish Flag breakout with strong volumes. Buy on declines toward Rs 140 for a target of Rs 152, with a stop loss at Rs 133 Piramal Pharma: Confirmed a breakout on Friday after closing convincingly above the key resistance at 205. We recommend buying for a target of Rs 224, with a strict stop loss at Rs 196.DHUPESH DHAMEJA DERIVATIVES RESEARCH ANALYST, SAMCO SECURITIESWhere is Nifty headed? The Nifty closed marginally below the previous day’s low, signaling ongoing profit-taking and the possibility of sideways consolidation. However, corrective dips are likely to attract fresh accumulation. Call writers have been more aggressive, with fresh open interest at 25,500 strike establishing this level as a strong resistance, while heavy put contracts at 25,200– 25,100 reaffirm support. The simultaneous buildup of both calls and puts near at-the-money strikes suggests indecision, pointing toward a nearterm range-bound market. Despite intermittent profit booking, optimism persists as FPIs have covered a significant portion of their shorts over the past three weeks, while also adding marginal long positions. Trading strategy for the week: As long as Nifty holds above 25,100–25,200 and Nifty Bank sustains 55,000–54,800, buyers are likely to remain active. A decisive breakout above 25,500 in Nifty and 56,000 in Nifty Bank will be crucial for further upside. Until then, range-trading strategies are favored. Sectoral rotation is evident. Banks and financials, insurance, pharma, and electronic & consumer durables show resilience and could offer near-term opportunities. Setups look encouraging in Union Bank of India, Housing and Urban Development Corporation, New India Assurance, Mankind Pharma, and Amber Enterprises India.SOMIL MEHTA HEAD OF ALTERNATE RESEARCH, MIRAE ASSET SHAREKHANWhere is Nifty headed? After After moving sideways for nearly four months between 24,500 and 25,000, Nifty has finally broken out of the range. The next hurdle to watch is 25,670, the previous swing high. On the weekly chart, Nifty has posted three consecutive positive closings, each one higher than the last, which shows market strength. In the medium term, the outlook remains positive. Strong support lies near 24,365–24,366, which coincides with the 200- day and 40-week moving averages. As long as Nifty remains above these levels, the uptrend should continue. From an Elliott Wave perspective, the recent correction (wave 4) is complete, and Nifty has started its next upward leg (wave 5). This was confirmed by the strong quarterly close in June 2025. Over the medium to long term, Nifty could move toward 28,000 and beyond. Trading strategies for the week: Sector rotation is in play. While some sectors face short-term pressure, this is creating opportunities for medium- to long-term investors. It is a good time to accumulate quality large-cap stocks for stability, along with select mid-cap value stocks for growth. Sectors to focus on: Defence, pharmaceuticals, capital goods, and automobiles. Large-cap ideas for portfolio stability include: Larsen & Toubro, State Bank of India, Bajaj Auto, Dabur, Bharti Airtel, Dr. Reddy’s Laboratories, and ICICI Bank.

The US government's decision to impose a $100,000 fee on new H-1B visa applicants is expected to cast a shadow over remittance growth and partially impact earnings from the foreign exchange business for financial services providers, bankers and forex advisors said. Remittances-or the money sent home by Indians working abroad-totalled $34 billion in the quarter ended June 30, up from $29.5 billion a year earlier, show balance of payments data. Net remittances in fiscal 2025 ended March 31 were $124 billion.Forex remittances will be affected by the US decision, said Hariprasad MP, executive director & head of business at Ebixcash World Money Ltd. "There is a likelihood that companies will reduce travel to the US, which in turn will bring down forex transactions."The forex business from companies is also expected to be partially impacted, as fewer employees may travel to the US for on-site projects.State Bank of India posted a forex income of ₹1,632 crore in the first quarter of fiscal 2026, four-and-a-half times more from a year earlier. Remittances paid through SBI totalled ₹1,502 crore, growing 0.7% on year. "We've observed a shift in remittance patterns. Before Covid, a significant portion of remittances came from the Middle East. Now, over 25% of our total remittances originate from the US," said Gaura Sen Gupta, chief economist at IDFC First Bank. "If the current situation persists, the growing uncertainty will discourage people from working in the US, which could negatively impact remittances from that region. The impact will likely be visible in the numbers over the coming months," she added.

India skipper Suryakumar Yadav again refused to shake hands with Pakistan's Salman Agha as he won the toss and elected to field in their Super Four contest of the Asia Cup on Sunday.The two neighbours come into the key match of the regional tournament with tensions high after India angered Pakistan with a 'no handshake' stance in their previous meeting at the same venue in Dubai.It was the first cricketing clash between the rival nations since a four-day cross-border conflict in May left more than 70 people dead.Andy Pycroft will be match referee in spite of Pakistan lodging a protest with the International Cricket Council, alleging that the Zimbabwean had told Agha not to approach Suryakumar for a handshake.The Pakistan Cricket Board demanded Pycroft be removed from their matches and threatened to withdraw from the eight-team T20 competition.Because of fraught political ties, nuclear-armed neighbours India and Pakistan only meet at neutral venues during multi-team tournaments.India come into the Super Four unbeaten with three wins in the group stage."Since first round we were thinking we're playing a knockout tournament, nothing changes," said Suryakumar.Pakistan, who came second behind India with two wins and one defeat, cancelled their pre-match press conference, but Agha said "the mood is normal" within the camp.TeamsIndia: Abhishek Sharma, Shubman Gill, Sanju Samson (wk), Suryakumar Yadav (capt), Tilak Varma, Shivam Dube, Hardik Pandya, Axar Patel, Jasprit Bumrah, Kuldeep Yadav, Varun ChakaravarthyPakistan: Saim Ayub, Sahibzada Farhan, Fakhar Zaman, Salman Agha (capt), Hussain Talat, Mohammad Haris (wk), Mohammad Nawaz, Faheem Ashraf, Shaheen Afridi, Haris Rauf, Abrar AhmedUmpires: Ahmad Shah Pakteen (AFG), Gazi Sohel (BAN)TV Umpire: Ruchira Palliyaguruge (SRI)Match Referee: Andy Pycroft (ZIM)