The beginning of last week of FY23 will open on a flat note for domestic markets with positive bias. Though global markets are positive in early deal on Monday, analysts are still cautious. Experts believe market is likely to consolidate around the lower band of correction.

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According to marketmen, with no positive triggers to lift the market, any bounce back would see waves of selling to keep it under pressure. However, according to them, most of the negatives are priced in and the chances of further fall from the current level is limited.

SGX Nifty at 17030

Meanwhile SGX Nifty at 17,030 indicates a flat opening for Nifty, as Nifty April futures on Friday closed at 17,047.90 while March futures ended at 16,955. While the US index futures maintained their gains, equities across Asia-Pacific region are mixed with Australia, Japan, and Singapore ekeing out a marginal gain even as China, Taiwan and Korean markets are down.

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If there are no negative news, especially from the global banking segment, domestic markets are likely to recover marginally, said analysts. There is a mild shift in global investors expectation that the US Federal Reserve and other global central bankers will go slow on rate hike and even may resort to reduction by the end of the next quarter to avoid deflation and hard landing of economy.

Tightening to end?

“The massive recent rate cut repricing, and flight-to-safety rally in short-term bonds, hints at a high probability of a recession/hard landing, with bond market volatility (MOVE index) spiking to near-GFC levels,” said Madhabi Arora, Economist at Emkay Global Finance.

According to her, equity volatility and valuations remain seemingly unperturbed possibly due to: equities perceive the banking crisis as an event that will hasten the end of the tightening cycle, even as inflation is not yet ‘cured’, growth remains robust; and “we may have seen the de facto end of QT”. This, combined with lower yields, and a re-expanding Fed balance sheet, may be triggering bond volatility and divergence vs equities, she added.

Amidst gloomy global market sentiment, all eyes on foreign portfolio investors’ behaviour, who remain steadfast in their selling.

FPIs remain cautious

VK Vijayakumar, Chief Investment Strategist, Geojit Financial Services, said: FPIs are likely to remain cautious in the near-term since there is a risk-off in equity markets globally due to the stress in the US banking system and crash in banking stocks.

“In India inflows will be mainly targeted at domestic economy-facing sectors like banking, capital goods and autos. A contrarian trend in favour of IT and pharmaceuticals is likely in the near-term since the valuations of these segments have turned attractive after the recent corrections,” he added