- Indian equities may face near-term downside due to high crude prices and weak domestic flows
- Nifty is expected to trade between 23,000 and 24,200 in the next two weeks
- Foreign investor buying linked to MSCI review, not broad bullishness on Indian stocks
Indian equities could see more downside in the near term as elevated crude prices, foreign investor selling and weaker-than-expected domestic flows weigh on sentiment, according to Feroze Azeez, Joint CEO of Anand Rathi Wealth.
Speaking to NDTV Profit, Azeez said he expects the Nifty to remain in a 23,000-24,200 range over the next two weeks, while cautioning that the index could face further pressure after failing to sustain a move above 24,000.
He attributed part of the recent foreign investor buying to positioning around the MSCI August review, rather than a broad shift towards bullishness on Indian equities. According to his estimates, FII flows reversed sharply in early September, while mutual fund collections in the first four days of the month were around Rs 6,500 crore, below his estimate of Rs 7,800 crore.
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Crude remains another key risk. Azeez said higher oil prices put pressure on India's fiscal position and inflation, although he expects the full-year average to remain relatively sticky.
His estimate for the financial year is an average crude price of about $85 a barrel, which could move to $86-$87 rather than rise substantially unless prices remain at extreme levels for an extended period.
He said the recent oil spike has particularly hurt sectors negatively correlated with crude, including paints, chemicals and NBFCs reliant on wholesale borrowing, where elevated valuations have added to the pressure.
On sectoral positioning, Azeez is positive on Nifty Energy and Nifty Pharma. He sees the Energy index, around 38,500, potentially moving towards 40,000-41,000, while Pharma could rise from around 26,000 towards 28,000-29,000. He remains negative on Nifty IT, Auto and Realty, citing the possibility of short-term corrections.
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