Benchmark equity indices opened on a subdued note on Tuesday as investors adopted a cautious stance ahead of a heavy lineup of Q2 earnings announcements. At 9:33 am, the S & P BSE Sensex slipped 123.01 points to 83,855.48, while the NSE Nifty50 was down 53.50 points at 25,710.05. The muted start comes as traders brace for fresh corporate earnings and global market cues that could set the tone for the week.

FIIs' Continued Selling Pressure Limits Market Rally

According to Dr. VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services, renewed selling by Foreign Institutional Investors (FIIs) is limiting the market's upward momentum.

"During the last four days, FIIs have sold equity worth Rs 14,269 crore. This indicates that they may continue selling on rallies. High valuations in India and muted earnings growth are prompting FIIs to look at cheaper markets with stronger profit outlooks," he said, adding that this could be a short-term hurdle.

Medium-Term Outlook Remains Strong

Despite near-term headwinds, Vijayakumar highlighted that India's medium-term prospects remain robust, backed by solid GDP growth and strong sales data, particularly from the automobile sector.

He noted that while banking earnings may show modest growth and IT companies could face muted results in FY26, earnings growth is likely to accelerate to around 15% in FY27. "The market will soon start discounting this," he added.

PSU Banks Show Remarkable Resilience

A notable trend, Vijayakumar said, is the continued resilience of public sector banks. "This segment remains attractively valued in a richly priced market. The prospects for PSU banks look bright, especially with the anticipated mergers in the sector," he observed.

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