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The new financial year set to open on a dull note for Indian stock investors, as SGX Nifty points a weak beginning. Though the crude oil prices moderated a bit, analysts expect the volatility to continue till the geopolitical tension between Russia and Ukraine completely subside.
Concern over rising inflation, tightening of monetary policy by central banks, uncertain geo-political environment over Russia-Ukraine conflict and volatility in commodity prices will keep market under check, analysts said.
According to Siddhartha Khemka, Head - Retail Research, Motilal Oswal Financial Services Ltd, "Due to the current global developments, we expect market volatility to remain high in the near-term."
FPIs turn buyers
SGX Nifty at 17,430 indicates a 120-point gap down opening for Nifty as Nifty April Futures on Thursday closed at 17,544 on the NSE. Most equity markets across Asia Pacific are in negative zone though Australian stocks edged up marginally in early deal on Friday. Overnight, the US stocks too ended in negative as all the three major indices dipped about 1.55 per cent.
However, analysts are positive on Indian stock markets due to underlying long-term economic growth. Besides, the moderation in F&O selling has also lifted confidence. FPIs bought shares worth over ₹3,000 crore on Thursday. Analysts expect FPIs to come back as big buyers in the next few days, after months of heavy selling.
Strong F&O rollovers
Besides, rollover in Nifty Futures to the April series was also on the higher side. Traders rolled over about 80 per cent of their positions to April series, which is higher than the three-month average of about 75 per cent, said analysts.
Similarly, Bank Nifty rollovers stood at around 90 per cent against three-month average of 85 per cent. Cost of carry has also widened, signalling traders are willing to pay premium to carry over their positions.
According to analysts, the long-term prospects remain positive though the market may witness volatility in the near-term.
Economic recovery coupled with government focus on capex and domestic manufacturing would drive overall growth in FY23, said Khemka.
"We are positive on IT, select BFSI, commodities, retail, real estate, defence and telecom for FY23. Also one can consider FMCG, autos and cement as contra plays and accumulate them gradually for long-term," he added.
Deepak Jasani, Head of Retail Research, HDFC Securities, said: "Nifty seems to be consolidating after a rise. In the new F&O expiry series and a new fiscal year, we could see some upward momentum in the first few days. Whether this will take Nifty beyond the 17795 mark will be interesting to watch. On down moves 17344 could be a support."
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