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Domestic stock markets are likely to open the last week of 2022 on flat note with a negative bias. Analysts expect volatility to rise due to the impending settlement of F&O December contracts this Thursday. Global stocks are still feeling the pressure of US Fed’s rate hike impact and its consistent hawkish stance. Analysts also see uncertainty due to rising Covid cases in China.
VK Vijayakumar, Chief Investment Strategist, Geojit Financial Services, said that FPIs have turned cautious as concerns about Covid spread in China has led to a negative sentiment and the strong economic data from the US indicate continuation of the hawkish stance by the Fed, which in turn is pushing bond yields up and equities down.
Only reversal of this trend will trigger a rebound in the market, he added.
SGX Nifty at 17,900 indicates a gap-up opening for Nifty. The Nifty (December) futures and the Nifty (January) futures on Friday closed at 17,863.90 and 17,973, respectively.
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Sentiment turns jittery but the charts indicate limited downside from hereAsian stocks are mixed in early deals on Monday. While the markets in Tokyo and China are up, markets in Singapore, Korea and Australia are down. The US stocks closed in the green.
Ruchit Jain, Lead Research, 5paisa.com,said: “FIIs have recently unwound long positions and have net short positions which has led to this recent correction. The momentum readings on the lower time frame charts have entered the oversold zone and hence a pullback move could be seen in the near-term. However, looking at the overall structure, the upside could be limited and it could just be a retracement of the recent corrective phase.”
Siddhartha Khemka, Head-Retail Research, Motilal Oswal Financial Services Ltd, said: “Going ahead, we can expect further weakness in the equity given the worry over the potential risk from surging Covid cases and recessionary fears as central banks globally continue to remain hawkish.”
“We expect sectors like entertainment, QSR, hotels, travel and tourism to see decline as government has initiated various precautionary measures. However, any decline will be good opportunity to gradually accumulate fundamentally quality stocks,” he added.
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