Chennai, Oct 6 Wednesday’s festival break is unlikely to halt the bullish momentum in domestic markets. Thanks to a strong recovery in US stocks, equities in Asia opened on a positive note on Thursday.

With US stocks, too, turning around after a steep fall, analysts expect growth-oriented emerging markets will see bigger gains.

‘Relief rally’

Craig Erlam, Senior Market Analyst, UK & EMEA, OANDA, said: It's been an impressive relief rally (for US stocks), albeit one aided by a rose-tinted interpretation of certain economic indicators and a terrible plunge in the weeks before.

"This isn't the time to get carried away, but it is understandable that we're seeing some relief. It all hangs on whether the data is the start of a weakening trend or just a blip, as with the July inflation drop."

SGX Nifty at 17,430 signals a gap-up opening of over 100 points.

Alok Agarwal, Portfolio Manager, Alchemy Capital Management, said: With the global bounce in equity assets, India continues to exhibit strength on both an absolute and relative basis.

Foreign portfolio investors, too, turned positive in Indian bourses. On Tuesday, they bought shares worth Rs 1,344 crore.

Strong micros

"With a world beating GDP growth of more than 7 per cent expected in the current financial year, more than 14 per cent consensus Nifty earnings CAGR over the next 2 years, system credit growth at 9-year highs of more than 16 per cent, and lower inflation than the US and UK for 18 straight months, we believe India stands tall in terms of an investment destination," said Agarwal.

Indian markets are showing strength after making a near-term bottom around last week’s Nifty low of about 16,800 levels. "We expect the momentum in Nifty to continue towards the 17,650-17,700 zone," said Siddhartha Khemka, Head - Retail Research, Motilal Oswal Financial Services Ltd.

Analysts expect the broader market will remain range-bound with a positive bias ahead of the results season.

TCS results

The earnings season is about to begin, with TCS reporting its results on October 10.

"Being a seasonally strong quarter, IT companies are expected to report healthy 9 per cent constant currency QoQ PAT growth in Q2. However, the commentary around weakening global macro and adverse FX impact would be a key monitorable," he added.

Pre-quarterly updates from banking and financial companies indicate strong Q2-FY23 earnings, hence this sector could see momentum in the near term. "We expect stock specific action with pre-quarterly updates coming in over the next few days," he said.