Domestic markets are likely to open on flat-to-negative note on Tuesday amid mixed global cues. Even as analysts are anxiously awaiting the final deal between Iran-US, markets will remain volatile due to F&O monthly settlement in the next two days (NSE: Tuesday and BSE: Wednesday). The market will remain light ahead of holiday (market is closed on Thursday due to Barkid-ID).Hariprasad K, SEBI-registered Research Analyst and Founder, Livelong Wealth, said despite supportive global cues and easing crude oil prices, the broader market structure appears increasingly fragile as traders enter a high-volatility monthly F&O expiry session.India VIX has cooled recently, but expiry-day volatility can still produce sudden intraday swings and rapid premium erosion in options. In the current environment, disciplined risk management remains more important than aggressive leveraged positioning, especially during the final hours of trade where expiry-driven reversals typically intensify, he said.Gift Nifty at 24,050 signals a gap down opening of about 70 points for Nifty at open.Ponmudi R, CEO of Enrich Money, said: institutional flow trends have also shown early signs of improvement. Foreign institutional investors (FIIs) have turned intermittent buyers in recent sessions after prolonged selling pressure. While foreign participation has not yet turned consistently positive, selective buying interest has provided some support to market sentiment. Domestic institutional investors (DIIs), meanwhile, continue to remain steady buyers, offering stability to the broader market through sustained domestic inflows.Valuation comfortAccording to JM Financial, valuations rebounded in Apr’26 following the sharp Mar’26 correction, with Nifty50 recovering to 18.6x (1Y forward P/E) from the 17.4x trough, though still trading at about 9 per cent discount to the FY26 average of 20.4x. The rebound was uneven: auto re-rated to 24.2x on strong volume data and now trades at a premium to the FY26 average of 22.1x. IT remains the most compressed large-cap sector at 17.0x versus FY25 average of 27.4x—a near-40 per cent de-rating driven by AI-led uncertainty. FMCG has recovered meaningfully from its 21.0x trough in Mar’26 to 29.5x, though it is still well below the FY25 average of 38.2x. Pharma is the only large-cap sector trading above its FY26 average (31.5x versus 28.3x), supported by resilient US generics and domestic formulations. Banks remain discounted at 1.6x P/B versus a 2.0x FY26 average, reflecting persistent FII selling. Mid-cap and small-cap valuations recovered but remain below FY26 averages, suggesting selective opportunities in quality franchises.Published on May 26, 2026