Indian stocks reach two-month high as analysts warn of overbought market
The Nifty and Sensex rose for a fourth straight day on Tuesday amid falling crude oil prices and US election optimism.
Indian equity markets rose for the fourth consecutive day on Tuesday, hitting their highest levels in two months. According to Mint, the Nifty 50 ended 1.58 per cent higher at 23,810.85, marking its best performance since 4 September. The BSE Sensex climbed 1.62 per cent to close at 76,917, its highest point since 1 September.
The market gains were supported by a drop in crude oil prices and anticipation regarding the US mid-term elections. Foreign institutional investors were net buyers for the third day in a row, purchasing shares worth ₹6,856 crore, according to provisional data from the NSE.
Despite the rally, analysts are flagging potential risks. The Nifty aggregate put-call ratio (PCR) open interest reached 1.52, the highest since 5 January. Rohit Srivastava, founder of analytics firm IndiaCharts, said the indicator suggests the market is in an overbought zone and may be due for a short-term pull-back.
The Nifty is currently trading 7.3 per cent above its 52-week intraday low of 22,179.9 recorded on 8 October. While the Nifty 50 has gained 5.34 per cent since that low, several global indices, including the S&P 500 and Nasdaq Composite, have declined.
Geopolitical tensions remain a factor for oil prices. George Thomas, fund manager at Quantum Asset Management, said any near-term moderation in crude prices would depend on a resolution to ongoing geopolitical tensions. Shrikant Chouhan, senior vice president (research) at Kotak Neo, noted that the outcome of the US mid-term polls on 3 November could influence market volatility and oil prices.