Domestic markets are expected open on a strong note, amid optimism across-the-board following successful G20 event and on sound technical condition. Technical analysts expect the bullish momentum to continue as most stocks, especially from mid and small-cap space, have breached the 200-day SMA and giving strong foundation for further rally. 

Analysts expect the benchmarks Nifty and Sensex to register new record highs, as they are tantalisingly close their earlier peaks. Dream run continues for a few sectoral, MidCap and SmallCap indices that are scaling new peaks on each passing day in the last few days.

Gift Nifty at 19,930 against Nifty futures Friday’s close of 19,872 indicates another gap-up opening of about 60 points. Asian stocks provide a little cues, as most of them are trading listless.

Mukesh Kochar, National Head - Wealth Management, AUM Capital, said: India would reap significant benefits, including increased foreign direct investment (FDI) across sectors. Electric vehicles are likely to grow fast in the future, with favorable regulations and incentives on the horizon to propel the sector forward. Auto sectors as well as start-ups working on green technologies, are set to gain from this program. Finally, India is likely to capitaliz\se on new trade opportunities as its renewable energy, defense, pharmaceutical, and chemical industries expand.

However, analysts advise caution on investors given the stiff valuation and on FPI inflows.

Shrikant Chouhan, Head of Research (Retail), Kotak Securities Ltd, said: “Even as domestic equity markets defied weak global cues to post solid gains last week, foreign institutional investors shunned local shares worth Rs 8,609 crore due to fresh resurgence in the US Dollar Index against other global currencies and subsequent spike in US treasury yields. Sharp currency weakness in China and Japan against the dollar also weighed heavily on the local currency leading to foreign fund outflows. If the US treasury yields continue to rise and other currencies falter against the US Dollar further, foreign fund inflows may remain choppy and overseas investors could exit emerging markets, including India.”

According toDr. V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services, “Net FPI investment in September has turned negative. As per NSDL data FPIs through 8th September have sold equity for Rs 4402 crores. If we exclude the bulk deals and investment through the primary market, the sell figure in the cash segment rises to Rs 8832 crores. This trend reversal in FPI investment from buying in the last three months to selling in September is mainly due to the rising US bond yields and the uptrend in the dollar index. FPIs can be expected to turn buyers when the dollar index and US bond yields decline, which, in turn, will depend on the incoming US inflation and growth data.

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