Markets likely to open flat-to-negative; profit booking seen at higher levels

KS Badri Narayanan Chennai | Updated on August 31, 2021

All eyes are on Nifty as it is zeroing in on 17,000 levels

After a sold and relentless run, headline benchmark indices are likely to slow down on profit-taking. Global cues were positive following the dovish tone of US Federal Reserve Chairman Jerome Powell regarding the withdrawal of stimulus measures. Sentiments were buoyant on hopes that continued support from the central government would sustain economic recovery, offsetting worries over rising Delta Covid-19 variant cases.

On Monday, foreign portfolio investors, who remained cautious and sellers, turned positive on Indian markets , by (net) purchasing ₹1,202 crore worth shares.

SGX Nifty futures currently hovering around 16,925 (at 740 am), as against Nifty futures yesterday’s close of 16,942.40 points and the Nifty spot close of 16,931.05. Asian markets are down marginally in early deals on Tuesday while US markets ended on a mixed note overnight with Dow slipping while Nasdaq and S&P-500 sustaining gains.

Siddhartha Khemka, Head - Retail Research, Motilal Oswal Financial Services, said: “Sentiments turned optimistic as Powell stressed that even if they start reducing asset purchases this year, it will not tighten monetary policy quickly.”

Now all attention will turn to an OPEC meeting due on Wednesday to discuss a further output boost. Further, investors will watch India’s GDP data due later this week, along with the Auto sales number that will start pouring in from Wednesday.

“However, rising Delta variant cases and poor monsoon does is a concern to the market,” he added and said, “From the long-term perspective, the overall trend of the market remains positive led by the opening up of the economy, improving economic data points and pickup in vaccinations”.

Shrikant Chouhan, Executive Vice President, Equity Technical Research, Kotak Securities Ltd, said markets may take a temporary pause near 17,000-17,050 levels due to an extended rally while intraday charts suggest the market is in an overbought situation. As long as the index holds the 16,800 levels, the uptrend formation could continue up to 17,000-17,050 levels, whereas on the downside, below the 16,800-level uptrend would be vulnerable.”

Published on August 31, 2021

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