Domestic markets are expected to open on a negative note on Wednesday, tracking global markets. Analysts expect profit-taking to emerge and keep the market in a range. Consolidation to continue as FPIs continue to pour money into Indian markets that will continue for some more time, they added. The focus will be on marco numbers, such as GDP data, GST collection, and auto sales figures.

Vinod Nair, Head of Research at Geojit Financial Services, said the domestic market continued its rally as recent Q4 results indicated improvement in demand. “Further, expectations of a normal monsoon and a drop in international commodity prices support a rise in the margin profile. The underlying trend is strong, supported by strong liquidity, the negative slope of the interest yield, and the forecast of strong QoQ growth in Q4 FY23 GDP vs. 4.4 per cent in Q3,” he further said,

SGX Nifty at 18,678 signals a fall of about 50 points as Nifty futures, on Tuesday, closed at 18,713.

Also read: Indian markets world’s fifth largest, again!

According to Ambit Capital, the fair value for Nifty is 20,900 by the FY24 end, considering the March-24 earning yield-bond yield (EYBY) gap. “It says that it prefers large-caps over small-cap and mid-cap stocks.

“Nifty fair valuation rises to 20,900 using 7.1 per cent G-Sec yield and March-24 EPS of ₹940 (vs consensus’ ₹991).” it said.

Prashanth Tapse, Senior VP (Research), Mehta Equities Ltd, said, “Risk appetite remained intact as markets continued to attract buying interest amidst upbeat mood in the backdrop of short covering and value buying. Bulls continue to cheer the US debt agreement to raise the $31.4 trillion debt ceiling for which the vote on the deal is likely on Wednesday.”

Meanwhile, most Asian stocks are down in early deal on Wednesday, as the US stocks failed to hold on to opening gains on Tuesday.

Also read: Asian stocks dip as investors question consequences of US debt deal

However, analysts expect domestic markets to remain resilient and Nifty to breach its previous all-time high soon.

“In the near term, we expect the market to take cues from its global peers and macro data to be released during the week,” said Siddhartha Khemka, Head - Retail Research, Motilal Oswal Financial Services Ltd. In addition, investors would watch for India’s GDP number, which will be released on Wednesday, he said and added “Nifty is showing strength and is inching up gradually toward its life-high levels. Bank Nifty has already crossed its previous highs and is providing much-needed support to the market. Even the Midcap index is at an all-time high and we expect the action in the broader market to continue.”

Also read: Stocks to watch on May 31, 2023

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