FII return seen as key trigger for Nifty’s next breakout: Sudip Bandyopadhyay

Indian shares may have regained the 26,000-point mark on the Nifty, but maintaining this level will depend heavily on global signals – especially a possible US-India trade deal – according to market expert Sudip Bandyopadhyay. Speaking to ET Now, he said the recent upturn is encouraging but far from a decisive breakthrough.“In the near future, we will also face volatility. What is happening is that domestic investors are buying, but foreign investors are still reluctant, and they are not buying Indian equities and they are selling heavily or they are doing nothing, those are the two types of strategies they are using. The only time when the buying will come back is probably when we have a deal,” he said.

With FII ownership at an all-time low, he believes there is significant room for upside once global confidence improves. “So once the FII starts coming back, we will cross the 26,000 mark in a decisive manner. Also remember that FII shares in Indian equities are at an all-time low, so there is significant scope for an upward move in the Indian market,” he said.

On the Reserve Bank’s rate cut, Bandyopadhyay said NBFCs are likely to be the biggest beneficiaries in the short term. Lower interest rates reduce borrowing costs immediately, but the transfer to borrowers is gradual, widening short-term margins for non-bank lenders.

“Certainly the NBFCs are the beneficiaries and that is pretty much reflected in what is happening in the market. As far as NBFCs are concerned, we have been bullish on gold loan NBFCs for a long time and we continue to stick to our view, so both Muthoot and Manappuram are buys from a long-term perspective even at current levels,” he said.

However, he urged caution on top Nifty constituents like Bajaj Finance and Shriram Finance, calling their valuations “a bit too high”. Because many of these stocks trade at six to seven times book value, he believes such a high price offers a limited margin of safety. On real estate, Bandyopadhyay noted that the sector typically benefits from rate cuts, although Friday’s rally appeared to be driven by sentiment rather than fundamentals.

“Yes, ultimately the cost of financing for the real estate companies will come down. The cost of home loans will come down and it will stimulate demand and things like that. But these things don’t play out immediately over a period of time,” he said, adding that he believes the sector is in the midst of an upward cycle, with more room for upside potential in the medium term.

For long-term investors, he highlighted DLF, Macrotech Developers (Lodha) and Oberoi Realty as strong opportunities, suggesting interest rate-sensitive sectors can provide selective value even in times of short-term volatility.