Stock market today: After a severe rout following FPIs' massive outflow from Indian equities in January, indices are buoyant and are barely 0.4 per cent away from an all-time high. Even fundamentals are supportive despite the unstable FPIs' stance. Foreign investors in the last two days have sold equities worth Rs 6,993 crore.

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"Market sentiment has significantly improved, reflecting a bullish outlook supported by technical conditions. Bank Nifty's inclusion in rising sectoral indices, alongside improving asset quality and government focus on fiscal discipline, is notable,” noted Prashanth Tapse, Senior VP (Research), Mehta Equities. 

Nonetheless, brokerages have turned cautious. HDFC Securities Institutional held the view that 66 per cent of the Nifty50 constituents are trading at a higher valuation than historical averages. For Nifty50 as a whole, the brokerage remarked that its price-to-book value, or P/B, is 114 per cent of its historical price/book average.

Similarly, the P/B ratio of the Nifty Midcap 100 and Nifty Smallcap 100 is 122 per cent and 149 per cent of their historical average valuations, respectively.

Market expert Ambareesh Baliga said that as long as there is no major correction, domestic retail investors will continue to be confident enough to pour in liquidity. Now it's not a question of valuation; it's momentum at play, and that's what is dangerous.