Domestic markets are expected to remain firm on Tuesday, amid subdued global cues. Analysts expect the consolidation phase to continue as foreign portfolio investors (FIIs) indulged in heavy sector-rotation.
Mitul Shah-Head of Research at Reliance Securities, said: "We expect the outperformance to continue given the FII investments and strong macros for the Indian economy. We expect strong economic rebound and better visibility in the near-term."
SGX Nifty at 17,760 indicates (7.45 am), a gap-up opening of about 130 points for Nifty. Equities across Asia-Pacific region are also in the green, as global markets are slowly discounting a possible 75 basis points rise in interest rate by the US Federal Reserve in its meeting on Wednesday.
However, analysts warn global equities sell-off. Edward Moya, Senior Market Analyst, The Americas OANDA, said: "This week is not just about the Fed, but about a wrath of central banks that are mostly considering super-sized rate hikes. It is difficult to buy stocks amidst lousy macro backdrop, persistent inflation pressures, global growth weakness, and slashed earnings outlooks."
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According to him, pessimism remains elevated as the US economy appears to have a one-way ticket towards a recession as the Fed is poised to remain aggressive.
"The risks for a retest of the summer lows could easily happen if the Fed remains fully committed with their inflation fight," he added.
Ajit Mishra, VP-Research, Religare Broking Ltd, said: "We expect choppiness to continue amid the feeble global cues. It’s prudent to place positions on both sides."
According to him, banking and financials are doing well on the expected lines and "we’re seeing selective buying in auto and FMCG on dips". On the flip side, most of IT and pharma stocks are trading with a negative bias. "Participants should align their positions accordingly," he added.