The stock markets are likely to sustain the momentum, propped up by foreign portfolio inflows and conducive global markets.
A lack of fresh triggers will keep the market afloat, said analysts. According to experts, most of the negatives are already priced in. However, as the valuation of Indian markets appears to be high, mid and small-cap stocks will see fresh accumulation, they added.
With the BSE Sensex registering a new peak, all eyes will be on the Nifty to see whether it achieves a similar milestone.
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IFA Global’s view
According to IFA Global, inflation has dominated the global macroeconomic landscape in 2022. Central banks globally embarked on a quest to rein in inflation, running at multi-decade highs, by raising rates swiftly. The US Fed has been one of the most hawkish central banks.
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“The market is currently pricing in a Fed hike of 5.00-5.25 per cent. Their hawkishness has resulted in massive dollar strength this year. The dollar index has risen about 11 per cent. Asian currencies have weakened 8-12 per cent as well,” it added.
In 2023, the domestic financial advisory firm said it expects the central banks to continue their fight against inflation. However, they are likely to tone down their hawkishness. “While it is difficult to say whether they will pivot, it is almost certain that they will slow down the pace of their hikes and maintain rates at elevated levels (this expectation is popularly being referred to as “a high hold”),” it further said.
SGX Nifty at 18,695 indicates a moderate gap-up opening for the domestic markets, as the Nifty Dec futures closed at 18,646 on Friday. Asia-Pacific stocks are down in early deals, indicating that the market may oscillate during the later part of the day.
Manoj Purohit, Partner & Leader – Financial Services Tax, BDO India, said: “Foreign portfolio investors (FPIs) continue to be bullish on the India markets, in comparison to the other emerging and developed markets.
The testimonial to this is the consistent buying trend seen since October 2022. So far, FPIs have infused more than ₹30,000 crore in equities. according to recent data. The domestic equity market has attracted foreign investors and the credit goes to the steady performance of the Indian economy, despite the global headwinds of the ongoing war, fluctuating Fed rates and a fear of recession knocking on the door.
“A few other factors that are driving the India growth story and attracting foreign investments are the highest ever tax collection numbers, anupward shift in domestic consumption due to the festive season, positive corporate earnings, strong valuations, successful IPOs, Government efforts in announcing regulations to attract offshore investors for capital infusion in start-ups, angel funds and promoting digitisation, innovation and the technology space,” he added.
Ruchit Jain, Lead Research, 5paisa.com, said: The F&O rollover data has been robust, with Nifty rollovers at 82 per cent and Bank Nifty at 88 per cent.
“The FII’s have rolled most of the long positions as theystarted the December series with the ‘Long Short Ratio’ at 76 per cent,” he added.
Technically, the ‘Higher Top Higher Bottom’ structure of the index continues and until we see the index breaching any important supports, the trend remains intact. Hence the ‘Buy-on-dip’ approach should be continued. The immediate short-term support for Nifty is placed in the range of 18400-18350, while 18170 would be seen the medium term support, where the ’20-day EMA is placed. On the flipside, the immediate resistance for Nifty could be seen around 18635, followed by the 18700-18800 range, he added.