Shillong, September 20: V.K. Vijayakumar, Chief Investment Strategist at Geojit Financial Services, highlights several significant challenges looming over the market in the near-term.
As per IANS, these challenges include Brent crude prices at $94, the dollar index surpassing 105, the two-year US bond yield reaching 5.09 percent, and the Indian Rupee (INR) hitting record lows against the dollar. These factors collectively pose strong headwinds for the market.
In addition to these challenges, there is the unsettling news of the potential compression of Net Interest Margins (NIMs) at HDFC Bank, which could temporarily affect sentiments in the Bank Nifty.
However, Vijayakumar believes that the strained relations between India and Canada are unlikely to leave a lasting impact on the market.
The frenzied activity in mid- and small-cap stocks has driven their valuations to elevated levels. Many of these stocks have seen significant increases based on hopeful expectations, but the realization of these hopes remains uncertain, potentially leading to execution challenges.
In light of these circumstances, investors may consider a cautious approach by sticking with high-quality large-cap stocks.
Furthermore, Vijayakumar notes that reasonably good Public Sector Undertaking (PSU) banks like Bank of Baroda (BoB), Canara Bank, and Indian Bank still offer attractive valuations.
As of the latest update, the BSE Sensex has experienced a decline of 625 points, trading at 66,946 points, with HDFC Bank down more than 3 percent.