The global trend to anchor market direction with the election, result season entering the last leg.

The domestic market is expected to open flat amid mixed trends in the global market. Even as the key benchmark indices are ruling at peak levels, analysts expect the momentum to be sustained in the short term. With the election entering the last phase and the almost Q4 result season-ending, analysts said that global sentiment drives the domestic market movement.

The slowdown in selling by FPIs augers well, they added.

Gift Nifty at 23030 against Nifty June futures value of 23109 and May futures (which expire this week) value of 23,019 indicates a flat opening.

Vipul Bhowar, Director, Listed Investments, Waterfield Advisors, said: The bumper dividend payout of ₹2.11-lakh crore from RBI to the central government for the fiscal year would have caused FPI to reconsider its strategy and temporarily halt selling.

Estimates suggest that the payout could bring about some positive changes. It will likely ease the FY25 fiscal deficit by approximately 0.2 per cent of the GDP. This reduction in the deficit could potentially decrease the government’s need to borrow from the market.

As a result, more funds could be made available for capital spending, stimulating economic growth. However, he said it may be premature to conclude that the “Sell India buy China” stance has been reversed. “Ultimately, it comes down to a trade-off between expected growth and current valuations. China appears inexpensive at current levels, while India may become expensive,” he further said.

Nifty futures in Gift City

According to Pravesh Gour, Senior Technical Analyst, Swastika Investmart, “On the domestic front, we’ve reached the final curtain for the Q4 earnings season. Many companies, including some big names such as Divis Lab, Tata Steel and Apollo Hospital, will release their financial results this week.

“We are very close to the Lok Sabha election results, and the election verdict will give a boost to FII flows,” he added.

Most benchmarks across the Asia-Pacific region, such as Japan, Korea, and Australia, eked out gains after the US stocks ended positive, led by the tech-heavy Nasdaq last Friday.

“The long-term outlook for foreign portfolio investment (FPI) flows into Indian debt is positive due to India’s inclusion in global bond indices. However, near-term flows are being impacted by global macroeconomic uncertainty and volatility. The trend will reverse once the interest rate outlook becomes clearer,” said Bhowar.

The RBI’s dividend payout is a positive development for the fiscal situation. However, its impact on FPI interest in the debt market is uncertain and will depend on how the government utilises the dividend. Considering the overall economic conditions, clarity on this matter will emerge in the full budget in July 2024, providing a clearer picture for FPI investors,” he added.

Siddhartha Khemka, Head - Retail Research, Motilal Oswal Financial Services Ltd, said Markets are continuously making steady gains, with Nifty achieving a historic mark of 23k zones just after a few days of BSE listed companies Market cap crossing $5tn. Further, India saw a record rise in exports and employment at an 18-year high in May. Thus, easing in FII selling and healthy domestic macro data supported the positive sentiments in the market. Overall, we expect the market to witness a gradual up-move and see some volatility next week as election and earning season near the end.