Domestic markets are likely to begin the fresh week on a flat note, as benchmarks remain in a consolidation phase. SGX Nifty indicates a flat-to-negative opening for domestic markets, even as most Asian markets are ruling in the red.

Despite valuation concern, analysts expect market to move in a narrow range in the next few days, as a slew of economic data present positive signals. According to them, global markets will anchor domestic market movements in the short-term.

After strong GDP numbers and robust GST collections, IIP too displayed buoyancy in Indian economy last week.

“India’s Industrial Production (IIP) expanded by 11.5 per cent YoY in July as unlock measures lead to further normalisation, thereby helping industrial output to recoup its lost momentum. Sequentially, the IIP print grew for the second consecutive month by 7.2 per cent in July from 5.7 per cent in June. The improvement is in conjunction with a pick-up seen in high frequency indicators such as exports, E-way bills, PMI manufacturing and auto production for the month of July,” said Suman Chowdhury, Chief Analytical Officer, Acuité Ratings & Research.

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Santosh Meena, Head of Research, Swastika Investmart, said, bulls are taking a breath after a strong run-up but they are still holding baton to continue their march towards a new milestone as there are no signs of weakness in the Indian markets.

“Muted institutional flows are leading to some consolidation in the market but there is decent buying in many quality midcap and small-cap stocks beneath the flat headline indices,” he said and added, “global cues will continue to impact our market’s behaviour.”

SGX Nifty at 17,360 (8 am), indicates Nifty flat opening for Nifty but with downward bias, as Nifty futures on Thursday closed at 17,364.30 on the NSE. Asia-Pacific stocks, except Australia and New Zealand markets, slipped marginally. However, Hong Kong’s Hang Seng, tumbled over one per cent in early deal on Monday. Last week, US stocks closed weak by about 0.8 per cent.

According to Hemant Kanawala, Head – Equity, Kotak Mahindra Life Insurance Co Ltd, overall small and midcap space outperformed with asset heavy sectors such as infrastructure, energy, utilities, capital goods doing well.

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“While national Covid case numbers remain low, there are pockets of localised outbreaks that demand caution in light of upcoming festive season. Notwithstanding the impact of Covid, the economic outlook continues to remain constructive with the recovery remaining on track and policy support being abundant. India’s domestic and external dynamics remain strong with both government and the RBI continuing to take appropriate policy decisions which will continue to act as tailwind to economic recovery as well as equity markets performance,” he added.

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