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Despite headwinds, domestic stock markets are likely to start the new week on a firm footing.
According to analysts, the market is expected to remain volatile due to selling by FPIs and this week being the settlement week for January contracts in the F&O segment.
A strong set numbers from leading banks and IT majors and a mixed show from Reliance and second-rung IT and IT-related companies and FMCGs will keep the market stock-specific, they added.
Analysts further expect traders to keep their position light ahead of the Budget.
According to Santosh Meena, Head of Research, Swastika Investmart Ltd, the FIIs’ long exposure in index futures is near 50 per cent, indicating a neutral position. However, a put call below one suggests the possibility of a short covering move.
SGX Nifty at 18,140 indicates a positive opening for domestic markets as Nifty Jan futures on Friday closed the weak at 18,055 and Feb futures at 18,131.
Markets in China, Taiwan, Hong Kong, Singapore and South Korea are closed due to New Year while markets in Japan and Australia are up in early deal on Thursday following a massive gains in the US stocks.
The US stocks edged up on hopes of slowdown in US Fed’s rate hike cycle.
IFA Global in a note said: “The dilemma for the Fed, however, is that labour market is still strong (as was highlighted again this week by jobless claims which came in below the 200k mark) and that could keep core inflation elevated.
“Weak retail sales coupled with still hawkish comments from Fed members caused concerns around hard landing to resurface. Market is expecting a 25bps hike in the Feb policy and terminal Fed funds rate to be around 4.90 per cent (4.75-5 per cent Fed funds rate range),” it added.
According Craig Erlam, Senior Market Analyst, UK & EMEA OANDA: “It’s been another eventful week and one that serves to remind us that while there may be more sources of optimism this year (compared with the last year) it’s going to be a very bumpy ride.”
Experts expect the selling by foreign portfolio investors to continue.
VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services, said: “The major trend in FPI investment in January is the sustained selling by FIIs, which is a bit surprising early in the year. Till 21st of this month, FPIs have sold equities worth ₹15,425 crore (NSDL data). FPIs were big sellers in financials, IT and telecom. They bought significantly in metals and mining segments. The sustained selling by FPIs is a bit surprising since the dollar index has been steadily declining.”
Santosh Meena said: “According to OI distribution, there is a fierce battle between bulls and bears around 18000 levels, while 42500 put writers are betting on the bullish side in Bank Nifty.”
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