Indian stock markets are expected open on a flat note despite weak closing of US markets overnight. SGX Nifty indicates at 17,570 signals that Nifty is likely to see a flat opening, as Nifty futures on Thursday closed at 17,547.

Mixed global cues

Asian markets are also ruling flat though in negative. However, Korea’s Kospi continues to maintain its bullish momentum. However, the US stocks slumped overnight, post Facebook’s parent’s disappointing numbers. While the Dow Jones slumped 1.45 per cent, tech-heavy Nasdaq crashed 3.74 per cent. Broader S&P-500 too tumbled 2.44 per cent, as tech giant Facebook plummeted over 26 per cent.

Analysts expect the market to remain on sidelines before making a big directional shift. According to them, most of the negatives such as rate hike, global inflation, corporate performance and geopolitical tension are discounted. However, for a fresh rally the market needs a trigger and return of foreign portfolio investors as buyers, who have been selling relentlessly.

Market is witnessing a pause in its momentum as the focus now shifts away from budget to interest rate/inflation, said Siddhartha Khemka, Head - Retail Research, Motilal Oswal Financial Services Ltd.

Eyes on RBI policy

The forthcoming RBI policy meet on February 9 will also be an important event to watch. Q3FY22 earnings has been good so far and most of the management commentary suggests Q4 numbers to remain be strong. "Overall we remain positive on the market. From a sector perspective, we expect infra, construction, cement, capital goods, affordable housing, logistics and defence to remain in focus," he added.

According to Mitul Shah, Head Of Research at Reliance Securities, Market welcomed the bold capex oriented budget and reacted positively post the announcement. The pro-growth Union Budget 2022-2023 was mostly on the expected lines, as sustaining growth momentum and job creation were the key focus areas of the government.

The Finance Minister tried to ensure all necessary measures to support development activities by sharply increasing capital expenditure by 35 per cent for FY23, along with a higher allocation for infrastructure projects.

Despite State elections around, the government has chosen a bolder path, highlighting its resolve to give growth the impetus by focusing on infrastructure and capex, he said.

"The earnings season has gathered pace with revenue largely in-line with estimates, however higher commodity prices are taking a toll on margin and profitability to some extent. In the past we have observed that volatility in market persists till the announcement of first rate hike by Fed, post which it settles down and flow in equities resume," he added.

Technical view

After a promising uptrend rally, the Nifty found resistance near the important retracement level of 17,800, said Shrikant Chouhan, Head of Equity Research (Retail), Kotak Securities Ltd and added that for the traders, 17,500 and 17,400 would act as strong support zones, while 17700-17800 could be the immediate resistance.

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