Stocks

Market to open on flat note ahead of FOMC outcome

KS Badri Narayanan Chennai | Updated on September 22, 2021

FPIs return as buyers; Market discounts Evergrande default fear

After a roller-coaster ride in the last two days, domestic markets are likely to open on a flat note with a negative bias. With all eyes on the US Federal Reserve that will clear air on interest rates later today, equity markets are likely to move in a narrow range.

Domestic equities look to be soft as of now.

Notably, yesterday’s recovery in equities and strong inflow from DIIs and FIIs show that markets have discounted possible fallout from likely default of Chinese real estate giant Evergrande, while Thursday would be crucial as $83 million interest payment is due for Evergrande.

“Global cues would continue to influence market this week as all eyes are set on ECB and US Fed MPC outcome where the expectation of continuation of dovish stance is running high,” said Siddhartha Khemka, Head - Retail Research, Motilal Oswal Financial Services Ltd.

Asian markets are ruling mixed with Japan, Taiwan and China markets down, while Australia, Korea, Indonesia and Hong Kong markets are up in early deal on Wednesday. However, the US stocks which gained sharply in early deal on Tuesday surrendered most to end flat.

Indian markets

The SGX Nifty at 17,530 indicates that Indian markets are open on a flat-to-negative note. Nifty September futures on Tuesday closed at 17,559.30.

However, Indian markets are likely to remain firm as foreign institutional investors have turned net buyers, said analysts. On Tuesday, they bought over ₹1,000 crore worth shares.

Increasing possibility of earnings downgrade in the USA markets following sharp rise in Covid daily caseload and continued reform measures undertaken by the government in India appear to have revived FIIs’ interest in domestic market.

“While concerns over global growth due to recent rise in delta variant Covid cases in different parts of the world continue to persist, we believe that underlying strength of domestic market remains intact. In our view, festive demand, recovery in rural demand, Covid-19 positivity rates and vaccination ramp-up will be in focus in the near term. We further believe that higher government’s capex and revival in industrials’ capex should aid economic recovery. However, liquidity driven market may take a backseat in 2022 and investors must start focussing on quality aspect of companies, in our view,” said Binod Modi, Head of Strategy at Reliance Securities.

Published on September 22, 2021

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