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SGX Nifty indicates a positive opening; volatility expected ahead of weekly F&O expiry

Our Bureau | | Updated on: Jan 13, 2022
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On Wednesday FPIs were net sellers to the tune of ₹1,001 crore in the cash segment

The SGX Nifty at 18,350 levels indicates a positive start, however, volatility is expected to continue ahead of the weekly F&O expiry today.

As the Sensex and the Nifty are just around 2 per cent away from hitting their new lifetime highs, the market is expected to react to Q3FY2022 earnings of IT majors TCS, Infosys and Wipro. While Infosys Q3 earnings beat market expectations, TCS and Wipro were in line with expectations.

Sensex and Nifty closed higher in the last session on buying by domestic investors even as FPIs have remained key sellers. On Wednesday FPIs were net sellers to the tune of ₹1,001 crore in the cash segment as per provisional data while DIIs countered it with net purchases of stocks worth ₹1,332 crore in cash segment. In derivatives, FPIs were net sellers of index futures worth ₹142 crore and net buyers of stock futures worth ₹584 crore.

Important session

Ajit Mishra, VP - Research, Religare Broking Ltd said, “It’s going to be a critical session on Thursday as participants will react to the results of IT majors like Infosys, TCS and Wipro and macroeconomic data (IIP and CPI Inflation) in early trade.”

“Besides, the scheduled weekly expiry would also keep the volatility high. Amidst all, sustainability above 18,200 in Nifty would pave the way for 18,350 levels. We’re still seeing opportunities across the board so traders should maintain their focus on the selection part and align position accordingly,” added Mishra.

Parth Nyati, Founder, Tradingo said, “Technically, Nifty managed to close above the resistance of 18,200 that has opened the door for a fresh all-time high; however, 18,342 could be an intermediate hurdle. On the downside, 18,000-17,950 will act as an immediate and strong demand zone while 17,800-17640 are the next support levels.”

“If we look at the OI distribution for the Nifty, put writers are looking confident; however there is still a tussle between bulls and bears at 18,200 level. We have weekly F&O expiry today and if Nifty manages to sustain above the 18,200 level, then expiry may settle between 18,300-18,350 zone, while if it slips below the 18100 level, then Nifty may head towards 18,000. Therefore 18,100-18,200 is a well-defined zone,” added Nyati.

Global markets

In the global markets, US stocks closed higher overnight while Asian stocks opened mixed on Thursday as US inflation hit a 39-year high. This, however, was in line with market estimates.

On the domestic front, discouraging news came on the economic front with industrial growth, based on the Index of Industrial Production (IIP) slipping to 1.4 per cent in November, the lowest in the current fiscal and retail inflation based on the Consumer Price Index (CPI) surging to a five-month high of 5.59 per cent in December.

This will put pressure on the Monetary Policy Committee (MPC), which is scheduled to meet early next week. However, experts expect MPC to opt for a gradual rate hike despite inflation warnings.

Rajani Sinha, Chief Economist & National Director – Research, Knight Frank India said, “At 5.6 per cent, the CPI inflation has reached very close to the RBI’s upper band of inflation tolerance. The surge in inflation in December was expected with the high base effect wearing off. Core inflation above 6 per cent remains a cause of concern for the Central Bank. Even with inflationary concerns persisting, the RBI is likely to be cautious and gradual in its monetary policy normalisation, given the uncertainties around Covid situation and fragile economic growth scenario”.

“Going forward, in the next few months we could see a further weakening of the growth momentum as the economy grapples with Omicron concerns and supply disruptions. The latest economic indicators are pointing towards the urgent need of demand stimulation measures to sustain the economic recovery. In the upcoming Union Budget, the government should look at measures to boost private consumption, which can be the bellwether of India’s economic recovery,” said Sinha on IIP.

Published on January 13, 2022

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