Domestic markets are expected to open cautiously on Tuesday after four days of gains. SGX Nifty at 15,750 (8:00 am) indicates a gap-down opening of about 85 points, as Nifty futures closed at 15,835 on Monday. However, analysts expect the markets to see only a limited downside from current levels, as most of the negatives are being discounted.
Eye on F&O settlement
The market is expected to remain volatile ahead of F&O settlement on Thursday. "Any short-covering ahead of expiry could result in a sharp rally in the stock," they added.
According to Mohit Nigam, Head - PMS, Hem Securities, declining commodity prices are positive for the domestic equity markets, which has been witnessed in recent sessions. However, one cannot rule out fears of inflationary pressures and monetary tightening.
Global cues are mixed, with select Asian stocks gaining. While Australia and the Philippines are up in early deals, Japan's equities are little changed. On the other hand, the Hong Kong, China and Taiwan markets are down over 0.5 per cent. US stocks were down overnight.
Asian stocks mixed
Global markets have been positive in the last few days amid improved risk sentiment, as treasury yields remained subdued, oil prices eased out and investors continued to assess the outlook for US rate hikes, and the potential for a recession, said Siddhartha Khemka, Head - Retail Research, Motilal Oswal Financial Services Ltd.
Prashanth Tapse, Vice-President (Research), Mehta Equities Ltd, said: "A risk-on-theme dominated Dalal Street and the markets ended with decent gains, but recovery was seen at risk towards closing hours as investors reassessed major central banks' tightening prospects amid growing signs of a slowdown."
“Technically, for Tuesday’s trade, Nifty’s biggest support is seen at 15477, and below that, expect a waterfall of selling. The index could face major hurdles at 15927 and then all eyes will be on the 16157 mark,” he added.
Mohit Nigam said, "The most optimal strategy in these volatile markets is to invest for the long-term in a staggered manner, with every significant dip".