SGX Nifty points a flat-to-positive opening for domestic markets. However, analysts fear that the tussle between Adani and short-seller Hindenburg will keep the focus and any recovery will see a bout of selling.

SGX Nifty is currently hovering around 17,720 against Friday’s close of 17,687. Asian stocks are mostly positive in the early deal on Monday. US stocks showed resilience last week despite mixed financial results by US Inc.

But for domestic markets, the local issues dominate the sentiment, said analysts.

The market will continue to monitor Adani Group, whose stock price has fallen below the floor price of its FPO. FIIs’ flow will be important because they sold more than ₹9,000 crore in the Indian equity market last week, said Santosh Meena, Head of Research, Swastika Investmart Ltd.

Also read: Adani group counters questions raised by Hindenburg Research

Last week was painful for the market: BSE companies lost ₹11 lakh crore in market capitalisation in the last two trading sessions.

“The entire gloom can be attributed to the Adani Group’s mayhem, which has lost ₹4-lakh crore in market capitalisation in the last two trading sessions following the publication of a research report with red flags by Hindenburg,” said Meena.

However, some analysts believe the return of FPIs due to India’s growth story. As the Government is preparing for the Budget session, which will open on January 31, analysts said market will remain sideways.

Manoj Purohit, Partner & Leader – Financial Services Tax, BDO India, said, “Though recently there has been some net outflow in terms of FPI investment, foreign investors are still preferring the FPI route for their investments as India continues to be a preferred investment destination in terms of overall growth and stability.”

Analysts said the Budget on February 1 and the US FOMC meeting (on the same day, late at night) are key triggers for the market.

“The Union budget is a key domestic event on February 1, and the outcome of the US FOMC meeting scheduled for the same day late at night is a key global event. A bunch of companies will come out with Q3 earnings this week, while monthly auto sales numbers and macroeconomic numbers from the US will be other important factors,” Meena added.

Also read: Markets may see increased volatility ahead of Budget, US Fed decision

Derivative data looks extremely oversold as the short exposure of FIIs in index futures jumped to 75 per cent while the put/call ratio is at 0.74.

Similarly, the fiscal Budget 2024 is likely to provide further acceleration for the foreign investment inflows as demonstrated by the Government in its previous budgets, added Purohit.