Domestic markets are likely to continue a downtrend on Tuesday as well, amid mixed global cues. With foreign portfolio investors continuing their selling in Indian markets, analysts expect market to remain under pressure.
According to market men, so far, Q3 results by India Inc are better than market expectations. However, stiff valuations pull funds out of Indian stocks, they added.
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SGX Nifty at 17,943 signals another soft opening for domestic stocks, Asian markets are mixed. Analysts expect the market to see downward pressure, until they see a positive trigger. As the Budget is around the corner, one can expect a range-bound movement with downward bias, they added.
Besides, widening trade deficit will add pressure on sentiment, they said.
The sequential improvement in exports benefitting from the pre-holiday shipments was not enough to stave off a YoY contraction in December 2022, in light of the weak global demand, said Aditi Nair, Chief Economist, ICRA.
“Nevertheless, softness in prices of some commodities contained imports to an extent, stabilising the trade deficit around the previous month’s level, and well below the average of $26 billion seen in the six months ending October 2022. We believe the current account deficit has likely peaked in Q2 FY2023, and foresee a moderation to $25-29 billion each in the subsequent two quarters,” she said.
However, the fall in WPI to 4.95 per cent in December from 5.85 per cent bodes well.
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“The easing of WPI is in line with the latest CPI inflation numbers which decreased to 5.72 per cent in December from 5.88 per cent in November. With signs of easing inflation, it will be a tough task for RBI to decide on the trajectory of interest rates in next Monetary Policy meeting,” said Raghvendra Nath, MD, Ladderup Wealth Management Private Limited.
Amid mixed macro figures, analysts expect domestic benchmarks to see a resistance on every rise.
According to Ruchit Jain, Lead Research, 5paisa.com, FII’s have been on the selling side recently, which has been the main reason for the limited upmove. “Also, if we look at the options segment, the option writers added positions in 18000-18100 call options and thus the derivatives data too hints at resistance in this range,” he added.
Traders are advised to trade with a stock-specific approach for now and trade in the direction of the breakout once the index moves beyond the range, he said.
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