Domestic markets will see a large gap-down opening, as global markets are wobbling under bear pressure. According to analysts, rising inflation, US Fed's imminent increase in interest rate and unwinding of bond buying programme and geopolitical tension to aggravate the selling across the board.
India’s Industrial Production (IIP) annualised growth dropped further to 0.4 per cent y-o-yin Dec’21 vis-à-vis the revised print of 1.3 per cent y-o-y in Nov-21 due to a slowdown in the manufacturing sector which witnessed a slight contraction of 0.14 per cent on a y-o-y basis.
Besides, input cost pressure for companies and a lack of any positive news will keep bulls under the shed.
However, the y-o-y print masks a significant pickup in the sequential growth of 7.5 per cent in the IIP which was driven by a broad based revival in mining, manufacturing as well as the electricity sectors.
"Overall, the momentum of industrial revival has been slow in Q3FY22 and given the high base factor, one can continue to expect moderate growth at best in IIP in Q4FY22," said Suman Chowdhury, Chief Analytical Officer, Acuité Ratings & Research.
Trading pattern in SGX Nifty indicates 17,000-mark looks vulnerable for Nifty, as bearish sentiment all around. SGX Nifty is ruling at 17,118 (7:30 am) suggests that Nifty is likely to open 250 points or and Nifty futures on Friday closed at 17,355.80 on the NSE.
According to Santosh Meena, Head of Research, Swastika Investmart, world markets are trying to adjust with expectations of a sharp rise in interest rates in the US after record inflation but the elevating geopolitical tension (Ukraine-Russia) is trying to make things worsen. This tension also led to a sharp rise in crude oil prices which is not good for emerging markets like India, he added.
The behavior of FIIs will also be an important factor because they are selling relentlessly. However there was a minor buying figure on Friday due to some block deals, said Meena. The interesting thing about the current market is that there is intense volatility but we didn't move anywhere since October despite more than ₹1.5 lakh crore selling by FIIs.
"Long exposure of FIIs in index future jumped to 48 per cent and the put-call ratio is sitting at 1.09 level, both are neutral for the market. If we look at the OI distribution chart then it is scattered therefore we don't have any clear direction from the derivative data," he added.
According to Ruchit Jain, Lead Research, 5paisa.com, "If we meticulously observe the recent price momentum in Nifty, then we could see the formation of ‘Lower Tops’ and ‘Higher Bottoms’. Nifty recently formed a high around 18,300 first, followed by intermediate highs of 17,800 and now 17,640. On the flipside, the intermediate lows of 16,410, 16,830 and then at 17040 indicate higher low formations,"
Such structure of ‘Lower Highs and Higher Lows’ in the index are usually formed in a consolidation phase which indicates that Nifty is consolidating within a ‘Symmetrical Pattern’, he said, and added, “On a broader time frame chart, this is seen as a time-wise correction where we could see buying interest on declines and selling pressure at higher levels. Until we see a clear breakout from this consolidation, the market is likely to continue such directionless moves and hence, focus should now be on stock specific trades.”