After a long break, domestic markets are expected open on a flat note. With lack of triggers, analysts expect lacklustre trading amidst continuous selling by foreign portfolio investors.

“Investors are optimistic regarding potential interest rate cuts in 2024, supported by favourable US consumer inflation data and improved jobless claims figures, resulting in a surge in gold prices and strengthened the stock market rally,” said Vinod Nair, Head of Research, Geojit Financial Services.

“However, uncertainties persist regarding the timing of US Fed rate adjustments, with market participants eagerly awaiting clarity from an upcoming Fed chair speech,” he said adding that “The release of PMI data for May from both the US and India next week will be closely monitored for further market insights. Amidst ongoing uncertainties surrounding election results and quarterly earnings, we anticipate continued volatility in the near-term.”

Also read: Stocks that will see action today—May 21, 2024

According to SBI Securities, in the US, a few Fed officials are going to deliver their speech while minutes of May month FOMC meeting will also be out. Barring this, the week is going to remain lacklustre on the data front as no major economic data releases are scheduled in both the US as well as India. Hence, the focus of Indian investors will largely remain on the ongoing earnings season as well as stock specific developments. We expect election led volatility to continue in the Indian market and hence, advise investors to exercise caution and accumulate good quality stocks during this volatile phase.

The Long-Short ratio improved to 28 per cent on May 17 from 26 per cent on May 16 as the foreign portfolio investors (FPIs) built more long positions compared to short positions in index futures, said Ashwin Ramani, Derivatives & Technical Analyst, SAMCO Securities.

Strong put writing was observed at the 22,400 Strike in Nifty. The call writers (Bears) still lead the put writers (Bulls) by a fair margin at the 22,500 Strike, he said.

As Nifty is likely to make a sharp upside move, call writers (Bears) need to exit from the 22,500 strike, he added.

Jaykrishna Gandhi, Head - Business Development, Institutional Equities, Emkay Global Financial Services, said, “The equity markets continued to remain volatile throughout last week, mainly influenced by factors arising from the US and Europe, essentially on speculations regarding the timing of the Fed rate cut. Weekly data often give varied indications moving from positive to negative, and this causes some unrest in the minds of the market participants. In the domestic markets too there is an extreme eagerness to know the outcome of the general elections, and this emanates from the need to know the possibility of continuity of policies. Certainty regarding this would help the markets to sail more smoothly, and it will have to wait till the first week of June.”

The current trend of swings on the index levels is likely to continue in the coming weeks too, though there is quite a bit of consternation from the high valuations obtaining at this time, he added.