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Domestic markets are likely to maintain momentum despite global markets craving for direction.
With continuous foreign portfolio investors’ support and a strong rollover of long positions, analysts expect the market to maintain its momentum.
Despite, technically the market is in an overbought zone and fundamentally with stretched valuations, analysts expect the rally to continue.
SGX Nifty at 18,365 indicates a positive opening for Nifty, as Nifty May futures on Monday closed at 18,324.
- Also read: Day Trading Guide for May 23, 2023
US stocks closed on mixed note overnight, with Nasdaq climbing 0.50 per cent while S&P 500 closed flat even as Dow Jones Industrial Average edged down 0.42 per cent.
Wall Street is struggling for direction as investors watch a lot of dealmaking, await debt ceiling (DC) negotiation updates, and rethink the Fed’s interest rate path. The biggest driver for markets remains the ongoing DC talks that will hopefully avoid a looming debt default.
Investors are also keeping a close eye on a steady dose of hawkish Fed speak, which will become the primary driver once DC can reach a deal.
Edward Moya, Senior Market Analyst, The Americas OANDA said, “We are getting closer to Treasury Secretary Yellen’s X-date and that should start to lead to market stress. The base case is still for a debt deal to be reached, but the risk of a default is still on the table. If the US defaulted on its debt, we would see an immediate plunge towards bear market territory and a month-long delay in payments that would deliver a big hit to GDP of around half a percentage point.”
Meanwhile, most Asian stocks are up in early deals on Tuesday. Analysts are now focussing on the developments of the US Fed meeting.
Buy domestic and foreign institutions to keep market firm and activity will be centered around specific stocks and sectors, they added.
Prashanth Tapse, Senior VP (Research), Mehta Equities Ltd said, “All eyes will be on the Fed meeting minutes, which are due to be released on Wednesday, May 24. Additionally, as this is an F&O expiry week, volatility is likely to be the order of the day. The preferred strategy is to stay nimble on long positions.”
Mitul Shah, Head of Research at Reliance Securities said, “Earnings season is at its fag end. The sample of NSE 500 companies that have reported their results so far shows aggregate revenue growth of 15.3 per cent y-o-y.
“Lower inflation and industrial growth provide room for the RBI to continue with its pause in the rate hiking cycle. The decline in WPI bodes well for the CPI in future months as lower raw material prices are passed through by the producers to the consumers which will also help in reviving slowing consumption,” he added.
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