Market update. Markets to open flat amid mixed global cues; Fed meet eyed

Domestic markets are expected to open flat on Wednesday, tracking mixed global cues. Analysts expect profit taking at higher levels will keep market in a range while all eyes are on the outcome of the US Fed meeting.

Eyes on Fed comments

BofA Securities said it expects the Fed to raise its target range for the federal funds rate by 75 bps in November to 3.75-4 per cent.

“In our view, the November FOC meeting is not about the November policy rate decision. Instead, the meeting is about future policy rate guidance and what to expect in December and beyond. We expect Chair Powell to open the door to a downshift in December by mentioning the debate took place in his press conference,” it said.

However, he is likely to maintain optionality by emphasising that the Fed will remain data dependent, it further said.

SGX Nifty at 18,226 indicates a flat opening for Nifty, as Nifty futures on Tuesday closed at 18,215 on the NSE. Asia-Pacific stocks are ruling flat in early deal on Wednesday.

Robust GST collection

Analysts said that healthy domestic macros to keep Indian market firm. GST collection in excess of ₹1.5 lakh crore and firm auto sales indicate a vibrant domestic economic activity, said analysts.

With the return of foreign portfolio investors as buyers and softening volatility index, market to remain resilient, they added.

However, analysts expect stock and sector specific activity to continue at domestic bourses, given the stiff valuation.

Ruchit Jain, Lead Research, 5paisa.com, said the momentum readings on the lower time frame chart in Nifty has reached the overbought zone, but we have often seen that the momentum usually continues in the overbought zone in a strong trended phase also.

“The Banking index took a backseat, while the IT sector supported the index. Such rotation is likely to continue in the near-term with sector specific moves that would provide trading opportunities,” he further said.

India Inc’s healthy revenue

According to Mitul Shah-Head of Research at Reliance Securities, the Q2 FY23 earning season so far witnessed healthy revenue growth but higher inflationary pressure took toll on profitability.

“For 160/BSE500 companies revenue grew by 25 per cent y-o-y, EBITDA increased by 17 per cent y-o-y, while PAT was up 8 per cent y-o-y. Inflation continues to remain sticky, both, in the domestic and the US economy. Any disappointment in earnings or weak management commentary on demand may lead to correction given sharp outperformance of Indian equity markets,” he added.

India is expected to maintain healthy growth pace of about 7 per cent GDP growth over the next few years and be among the fastest growing economies globally this decade.

The global companies trying to re-structure supply chains leading to China-plus-one strategy which is likely to continue to favour India’s growth prospects in the coming years, Mitul Shah further said.

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