The fresh week is likely to see a flat note on Monday but volatility will continue. Unabated selling by foreign portfolio investors will keep the market under pressure but strong quarterly results from India Inc, especially index heavyweights such as HDFC Bank will keep Nifty and Sensex stable, analyst said.
FPIs shifting to China, Korean markets
“An important trend in the market this month is the sustained selling by FIIs. FIIs sold for the 16 th straight trading session taking the total sell figure to ₹23,887 crore. FIIs are selling in India and moving money to cheaper markets like China, Hong Kong and South Korea where valuations are much lower,” said VK Vijayakumar, Chief Investment Strategist, Geojit Financial Services.
Also read: Quarterly earnings, inflation data major factors to drive trends in equity market this week: Analysts
SGX Nifty at 18,065 indicates a positive opening as Nifty futures on Friday closed at 18,022. Most Asian stocks are up, though Japan’s Nikkei is down one per cent. The US stocks closed in the marginally green on Friday amid expectation of slowdown in rate-hike cycle.
According to IFA Global Research, the market is now expecting a 25bps hike at the February Fed meeting to be the most likely outcome. This would imply a further downshift from the 50bps December hike. “Market is also ascribing some probability to the Fed not hiking at the March meeting at all. Market’s expectation of the terminal Fed funds rate continues to hover around 4.90,” it added.
Besides, FPIs selling, the focus will be on individual stocks that will declare their quarterly performance or any other corporate developments, said analysts. Due to the festive season and lack of triggers, volume is likely to remain low, they added.
In 2022, FIIs were selling in China. This trend has changed to long China and short India, Vijayakumar said and added: “This trend may continue for a few more days. Since DIIs and retail investors are buyers and are keen to buy the dips, the FII selling is unlikely to lead to a sharp correction in the market even though the market appears weak for the near-term.”
Focus on macro trends
Shrikant Chouhan, Head of Equity Research (Retail), Kotak Securities Ltd, said, “Going forward, D-street will focus on the macro trends. Markets going ahead may be dominated by global news flows and steps taken by different governments to tackle their economy.”
Also read: Stocks that will see action today — January 16, 2023
Santosh Meena, Head of Research, Swastika Investmart Ltd, said, “Indian markets are trading lower month-to-date with a significant FII outflow, whereas the majority of emerging markets rebounded in the first few days of 2023 with net FII inflows. The flow of FIIs is therefore a crucial variable in determining the market’s future course.”
“We are not witnessing any abrupt drops, though, as DIIs are working to maintain the market,” he added.
The Q3 season has begun with big IT names, and next week we will react on the earnings of some major names, including HDFC Bank, IndusInd Bank, HDFC Life, Asian Paints, JSW Steel, and HUL.