Domestic markets are likely to open on a flat note with downward bias amid mixed global cues. With analysts across the globe now expecting a 75-basis-point increase in interest rate by the US Federal Reserve on September 21, equities markets are expected remain volatile in the short-term ahead of the meet.
The global market has been pricing in the likelihood of a more aggressive policy response from the Fed in its upcoming meeting next week, they added.
However, thanks to better macro numbers, Indian markets' outperformance is likely to continue in the near term they added. SGX Nifty 17,580 (745 am) indicates a flat opening for Nifty futures, which on Friday closed at 17,566 at the domestic market. However, major Asian markets have opened in negative territory, led by Japan's Nikkei (-1.12 per cent) and Hong Kong's Hang Seng (-1 per cent).
Analysts said selling by foreign portfolio investors to continue till Fed-triggered uncertainty end, but heavy buying by domestic retail investors will help domestic markets stay afloat.
Stocks that will see action on September 19, 2022Buzzing stocks: ACC, Ambuja Cement, Adani Power, M&M, Tata Power, TVS Electronics, HDFC Life, Zomato, Granules India, Indus Towers, RattanIndia Enterprises, DLF, Shree Renuka Sugars, Welspun Corp, Ujjivan SFB, SAL Steel
FPIs have turned sellers in the cash market in the last few days. They sold equity worth ₹3,260 crore on Friday. "The global market situation has turned volatile on fears of global economic slowdown. FPIs are likely to wait and watch before resuming their buying in India," said Dr. VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services.
Eyes on India Inc performance
However, with sticky valuation, focus will be on India Inc's performance, analysts added.
Hemant Kanawala, Senior Executive Vice President & Head of Equity, Kotak Mahindra Life Insurance Company Limited, said as upside from valuation re-rating is limited hereon, the future performance and direction of the market will be driven by earnings upgrade and rollover. "As investors await clarity on earnings upgrade and keenly monitor demand outlook, markets may continue to consolidate in near term,” he added.
Analysts expect broader market to perform well. Sector and stock specific action will continue, they added.
"Mid and small caps are expected to continue their outperformance in the short to medium term as they are trading reasonably well compared to large caps and are at a discount to their historic valuation trend," said Vinod Nair, Head of Research at Geojit Financial Services.
Mitul Shah, Head of Research at Reliance Securities said: "We expect strong economic rebound, normalised commodity prices and better visibility in the near term, and expect inflationary pressures to cool down towards the end of FY23."