FII return could be the catalyst for Nifty’s next major breakout, says Sudip Bandyopadhyay

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Indian equities have recently crossed the 26,000 mark on the Nifty index, but sustaining this level is largely contingent on global factors, particularly the potential for a US-India trade deal, according to market expert Sudip Bandyopadhyay. He emphasized that while the recent rise is promising, it does not signify a definitive breakout. Domestic investors are actively buying, but foreign investors remain hesitant, either selling off their holdings or choosing not to engage in the market. Bandyopadhyay believes that significant foreign institutional investment (FII) is necessary for a sustained upward movement in the market.

With FII ownership at a record low, Bandyopadhyay sees considerable potential for growth in the Indian market once global investor confidence improves. He noted that the return of foreign investors could lead to a decisive break above the 26,000 mark. Additionally, he discussed the impact of the Reserve Bank’s recent interest rate cut, suggesting that non-banking financial companies (NBFCs) are likely to be the primary short-term beneficiaries. He highlighted that while lower interest rates will reduce funding costs for these companies, the benefits will take time to reach borrowers.

On the subject of real estate, Bandyopadhyay acknowledged that the sector often gains from interest rate reductions. Although the recent rally in real estate stocks seems driven by sentiment rather than fundamental improvements, he believes that lower housing loan costs will eventually boost demand. He sees the sector as being in an upcycle with potential for further growth in the medium term. For long-term investors, he recommends considering stocks such as DLF, Macrotech Developers, and Oberoi Realty, while advising caution regarding high valuations in some prominent Nifty stocks.