Domestic markets are expected to see a gap-up opening on Monday as foreign portfolio investors continue to pour money. Global cues are comfortable with the Dow Jones Industrial Average rallying over 700 points on Friday.

Tracking the US markets, most Asian stocks are up in early deals. SGX Nifty at 18,710 indicates a gap-up opening of about 80 points as Nifty futures on Friday closed at 18,633.

Focus on RBI meet

According to analysts, the focus shifts to the MPC meeting of the Reserve Bank of India. The MPC will hold its bi-monthly deliberations on June 6-8. Most analysts expect that the RBI will maintain the policy repo rate at 6.5 per cent.

Ashwani Dhanawat, CIO of Shriram General Insurance, said RBI MPC in its previous meeting voted for a ‘pause’ while preserving the same monetary policy stance that was focused on the withdrawal of accommodation, validating our minority view on the street. ”Considering the stellar GDP print we are expecting RBI to remain on a prolonged pause,” he added.

Meanwhile, FPIs are likely to pose continuous faith in Indian equities, said analysts.

VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services said, “FPIs were aggressive buyers in the market in May having invested ₹43,838 crore through the stock market and primary market put together. A survey among foreign portfolio investors showed that India is now the consensus overweight among all emerging markets. In May, India attracted the largest investment among all emerging markets, and FPIs were sellers in China.”

FPIs are likely to continue their investment in India in June too since the latest GDP data and high-frequency indicators reflect a robust economy gaining further strength, he said and added: “Financials, automobiles, telecom, and construction are attracting big investments.”

Strong macros

Analysts expect consolidation to continue for Indian markets, thanks to strong macro numbers.

According to Joseph Thomas, Head of Research, Emkay Wealth Management, the equity market has been holding quite well buoyed by the better-than-expected national income data, encouraging manufacturing PMI, and finally, a closure to the US debt ceiling discussions. 

“The positive sentiment created by these events may linger on for some more time. However, in the immediate term, one should be cognizant of the high probability for exports to slow down with almost all auto companies reporting a decline in the exports component, and a slowdown in FPI flows if the strength in the US unit endures,” Thomas added.