Stock market set to open firm, as consolidation phase to continue

KS Badri Narayanan Chennai | Updated on October 19, 2021

SGX Nifty indicates a 70-point gain at opening

Indian stock markets are expected to consolidate further on Tuesday as global stocks present positive signals. The US stocks closed on mixed on Monday with S&P 500 and tech-focussed Nasdaq closing higher while Dow Jones slipped marginally.

Despite the Indian rupee falling slightly against the dollar on Monday because a sharp rise in US Treasury yields and crude oil prices weighed on sentiment for the Indian currency, equity markets remain firm.

SGX Nifty at 18,567 indicates a 70-point gap up opening for Nifty futures, which on Monday closed at 18,795. Most Asian markets are up between 0.1 per cent and 0.4 per cent.

According to analysts, though Q2 financial performance of India Inc so far has been good, the current valuation of Indian benchmark is high and may see a correction soon. Indian markets will see a stock-specific action with institutions adopting sector rotation strategy.

“Domestic equities look good for the day. Notably, September quarter earnings have been quite encouraging so far with most companies succeeded to beat consensus estimates, which certainly offers comfort. Notably, sharp contraction in CPI print at 4.35 per cent for September despite elevated oil prices and expectations of soft inflations in Oct’21 may aid RBI in continuing with its policy support to sustain ongoing growth momentum,” said Binod Modi, Head Strategy at Reliance Securities.

According to Deepak Jasani, Head of Retail Research, HDFC Securities, “Nifty rose on very high volumes on Monday. Advance decline ratio closed in the positive towards the day end but was lower than the morning levels. Nifty is now overbought on daily charts. Tuesday is the eighth day in this uptrend and eight is also a fibonacci number that could denote a change in trend for the near term.”

Shrikant Chouhan, Head of Equity Research (Retail), Kotak Securities, said, “We are of the view that due to overbought formation the bulls may take a caution stance near the 18,600–18,650 resistance level.”

Published on October 19, 2021

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