The domestic market is likely to begin the fresh week on a flat note. Gift Nifty at 19,800 is ruling against Nifty futures’ close of 19806 on the NSE on Friday. Analysts expect financial stocks to remain in focus and anchor the market movement due to their higher weightage in key indices, following the recent RBI diktat on credit risk weight.

Analysts expect the market to move in a narrow range as most of the news (both positive and negative) is discounted. The market will remain consolidated as global and domestic micro indicators such as inflation and trade data signal stability on a crucial front. Analysts say risks can emanate from geopolitical concerns (such as Israel-Gaza and Russia-Ukraine).

Asian stocks are up in early deals on Monday. Arvinder Singh Nanda, Senior Vice President of Master Capital Services Ltd, said: The market will focus on the global and domestic macroeconomic data. 

Key data that moved asset classes this week was the US October CPI print, which came in below expectations., said IFA Global Research. US Oct PPI, too, came in lower than expected. “Progress on the inflation front has caused markets to revise lower its expectations of Fed’s rate trajectory despite Fed chair Powell’s recent hawkish comments. US Retail sales were slightly better than expected while jobless claims were a tad higher than expected. As of now, growth is holding up and labor market is resilient while inflation is coming off, which bodes well for risk assets,” it added.

The market is now pricing in a 100 per cent chance of the Fed maintaining the status quo in December (which was 90 per cent last week with a 10 per cent chance of a 25bps hike). The market is now pricing in a 48 per cent chance of a 25bps cut in May, up from 30 per cent a week ago,” the research note added.

According to Arvinder Singh Nanda, the focus will be on upcoming IPOs coming in a few days, such as the awaited Tata Technologies IPO, US Bond Yield, crude oil inventories, FII/DII Investment trend, and movement of the rupee against the dollar. “Market will take further cues from US Existing home sales, initial jobless claims, US Manufacturing and services PMI, FOMC Meeting minutes, UK Manufacturing and services PMI,” he added.

DII buying

According to analysts, the strong buying by domestic institutions and retail investors will likely keep the market consolidated. With the slowing down of FPI selling, one can expect the chance of the market moving up is higher, they added.

 Dr. V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services, said: An important trend in the market is the increasing clout of domestic institutions, HNIs and retail investors and the diminishing influence of FPIs. During August, September, October and November till the 15th, FPIs cumulatively sold stocks for Rs 83,422 crore through the exchanges. During this period, DIIs alone bought stocks worth Rs 77995 crores. DII and individual investor buying completely neutralise FPI selling. This is why Nifty is around 19700, the same level it was in early August, he said.

“The resilience of the market and strong up moves on favourable days have forced a rethinking in FPI strategy. That’s why they turned buyers on 15th and 16th of this month after sustained selling in the first two weeks of November,” he added.

Strong Q2

In a note, “Strong earnings season; little to worry about,” Emkay Global Financial said the Q2-FY24 earnings season closed with a positive undertone. The margin loss of FY23 is recovering incrementally, aided by lower commodity prices. Nifty earnings forecasts increased during this period, with a 2 per cent upward revision for FY24. “Going forward, Consensus EPS for the Nifty looks resilient, though there seem to be some worries at the individual stock level. We are constructive on the market for the medium term; near-term worries are also steadily dissipating,” it added.