Domestic markets are likely to see a gap-down opening on Monday. SGX Nifty at 18,250 indicates that Nifty may see a fall of 100 points at open. Analysts expect the market to remain lacklustre with a downward bias. With the result season almost over, analysts await fresh cues for further triggers. Experts said that results, so far, have been, except for IT and metal sectors, expected lines or better show.

FPIs record heavy buying

FPIs have been continuous buyers during the last twelve trading sessions. In May, through 12th, they bought equity for ₹18,617 crore (NSDL data). 

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V K Vijayakumar, Chief Investment Strategist, Geojit Financial Services, said there is a distinct change in the FPI strategy with a clear tilt in favour of India. “In the first three months of 2023, FPIs were continuous sellers in India due to India’s premium valuations and the opportunities provided by the Chinese reopening and the relatively lower valuations in South Korea, Hong Kong, and Taiwan. That phase is now over, and India has once again become a favoured emerging market destination for FPIs.” He added.

US default fears

The focus is now on US debt ceiling talks. “Fears of the debt ceiling not being raised and US government running out of cash by June and defaulting on its debt has dampened risk sentiment,” said IFA Global Research. Treasury Secretary Yellen reiterated that a default would be “an economic and financial catastrophe,” while Fed’s Bowman warned that they will likely need to raise interest rates further and hold them higher for some time if inflation remains high, said Edward Maya, Senior Market Analyst, The Americas OANDA.

However, the loss of ruling Bharatiya Kanata Party in Karnataka is likely to have only little impact said analysts. “The recently concluded Karnataka election has resulted in Congress emerging as the clear winner,” Santosh Meena, Head of Research, Swastika Investmart Ltd, said. Adding, “While this may have a sentimental negative impact on the market, it is important to note that much of this outcome has already been factored in by investors. Therefore, it is unlikely that we will witness a significant reaction from the market in response to this development.”

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