Indian stock markets are expected open on a strong note, thanks to global momentum. According to analysts, the FPIs have now stopped their aggressive selling and, in fact, resorted to selective buying. Besides, the weakness in dollar index to 106.3 level bodes well for emerging markets such as India, as one can expect more buying from FPIs, they added.

"The Indian markets have after their sharp correction in the early part of the year, got into a time/price correction mode over the last few months. While the index seems to reflect a bull market correction single stocks have corrected far more steeply reflecting a correction more like one seen in bear markets. The overall market depth has been extremely narrow, resulting in a phase where index investing has been a more profitable trade," said Nitin Raheja, Executive Director, Head – Discretionary Equities, Julius Baer India.

SGX Nifty points to a healthy start for domestic markets. It currently hovers at 16520, (7.40 am), signals a gain of about 175 points for Nifty, as Nifty futures closed at 16,347. Overnight, the US stocks sutained the momentum through the day and closed with a strong note led by tech-focussed Nasdaq. The index surged over 3 per cent to closed at 11,713 while Dow and S&P 500 jumped 2.4 per cent and 2.76 per cent respectively.

BofA Fund manager survey paints gloomy picture

However, July BofA Fund Manager Survey, shows dire level of investor pessimistic expectations for global growth and profits all-time lows and cash levels highest since 9/11. Equity allocation is the lowest since Lehman, and BofA Bull & Bear Indicator remains "max bearish. "H2-2022 fundamentals remain poor but sentiment says stocks/credit rally in coming weeks," it added.

"Going ahead, we believe volatility should settle down as the momentum and quantum of rate hikes become known events. Further commodity prices have also shown signs of easing off late making us believe we are over peak inflation. The resilience of the Indian economy and absence of any fresh negatives should result in a better performance of the markets in the second half of the year," Nitin Raheja, said.

Asia-Pacific: Sea of green

After a long while, almost all equities across Asia-Pacific region are trading in the green. While Japan's Nikkei soared 2.3 per cent, Australia, Korea and Taiwan are up around 1 per cent, in early deal on Wednesday.

Ruchit Jain, Lead Research, 5paisa.com, said: The momentum setups remain in buy mode on the daily chart, but it has reached the overbought zone on the hourly chart. “So, in case, if we see any negative crossover from the overbought zone on the hourly chart, then we could see in between declines in the index to relieve the overbought set ups.”

However, the broader markets have been witnessing good buying interest as the midcap and the smallcap index is slowly moving higher to retrace the recent corrective phase. Hence, traders should look for stock specific buying opportunities and trade with a positive bias, he added.

Related Topics
comment COMMENT NOW