Domestic market set to open weak

K. S. Badri Narayanan | | Updated on: Jul 01, 2022

Focus is on key economic numbers; FII behaviour

The beginning of the new month is unlikely to change the bearish sentiment in the bourses on Friday. Nifty at SGX market indicates a marginal fall for domestic markets at the opening.

According to analysts, the global have markets struggled to gain a footing amidst disappointing economic data and an aggressive monetary policy stance by various central banks, which has led to concerns over slowing economic growth as well as the possibility of a recession next year.

FPI sell-off continues

Besides global factors, in the domestic markets, the rupee’s slide to record low levels against the dollar, consistent FII selling, and elevated crude oil prices continued to pose big challenges.

Foreign investors pulled out more than ₹50,000 crore from Indian equities in June, continuing their relentless sell-off for the ninth straight month. Unless there is a change in their stance, the domestic market is unlikely to see a big recovery, they added.

However, underlying domestic economic activity remains strong.

Robust core sector output

The output growth of eight core industries came in strong for May. Reflecting a rebound in economic activity and aided by a good show from the coal, fertiliser, electricity and cement sectors, the output growth of eight core industries hit a 13-month high of 18.1 per cent in May. Also the government will announce GST collections figures for June today. It is expected that the collection will be around Rs 1.4-lakh-crore.

SGX Nifty at 15,730 (at 755 am) indicates another weak opening for the market. However, equities in the Asia-Pacific are mixed. While markets across Australia, the Philippines, and Singapore are up, Japan, Korea and Taiwan slipped in early deals on Friday. Overnight, the US ended weak, but after opening strongly lower, covered most of the losses.

Global stocks mixed

Global stocks sank on Thursday to extend what is the worst first-half of the year on record for global share prices, as investors worry that the latest show of central bank determination to tame inflation will slow economies rapidly, said Deepak Jasani, Head of Retail Research, HDFC Securities.

Siddhartha Khemka, Head - Retail Research, Motilal Oswal Financial Services Ltd, said: Nifty has remained volatile within a broader range and has not been able to cross the 16,000 level for the last 14 trading sessions – which continues to act as a major resistance in the near term, said

Brace for volatility

Even India VIX is hovering around 22 levels, indicating that volatility is likely to continue. On the positive side, the monsoon’s progress, expectations of good Q1 FY23 earnings, and reasonable valuations provide comfort to long-term investors, he added.

On the technical front, "Nifty holds a crucial support zone of 15700-15750 and we may see an upmove towards 16000 if it continues to hold this support zone," said Mohit Nigam, Head - PMS, Hem Securities. Immediate support and resistance for the Nifty are at 15,600 and 15,900 respectively. Immediate support and resistance for Bank Nifty are at 32,800 and 33,750 respectively, he added.

Published on July 01, 2022
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