Domestic markets are expected to open on a flat note on Monday. With foreign portfolio investors accumulating the Indian stocks, analysts expect the market to remain positive. However, as the valuation of equities at elevated levels, experts see sector rotation - by booking profits at certain stocks that ran up sharply and rechanellising the money into stocks that have not participated in the recent rally.

Santosh Meena, Swastika Investmart, said:Strong FIIs' flow and sharp fall in crude oil prices were key supporting factors for the Indian markets. If the flows from FIIs remain supportive, then our market is likely to head towards new highs soon.

As domestic macro numbers look impressive (direct tax and GST collections, auto and realty data), analysts expect Indian markets to consolidate further from here.

However, SGX Nifty at 17,845 indicates market to open on a flat-to-negative note as Nifty on Friday closed at 17,866.

“Markets look pricey, but...”

Amol Athawale, Deputy Vice President - Technical Research, Kotak Securities Ltd, said while the stock markets may look a bit pricey, India's long-term growth potential does bring some stability at a time when economic slowdown in key economies are staring at recession.

Siddhartha Khemka, Head - Retail Research, Motilal Oswal Financial Services Ltd, said: Domestic markets are likely to remain firm on healthy macro data, strong intuitional flows and improvement in festive demand.

"Expect sectors linked to capital expenditure, consumption and credit growth to do well over the next few weeks," he added.

Meanwhile Asia-Pacific stocks are up sharply in early deal on Monday. Japan's Nikkei, Australia's All Ordinaries index and China's Shenzhen index jumped over one per cent.However, Hong Kong's Hang Seng (2.7 per cent) and Taiwan's Weighted (1.8 per cent) stole the thunder in early deal on Monday. Asian markets derived strength from US stocks, that scored first weekly gains in four by jumping 1.2-2.15 per cent on Friday.

Eyes on inflation, production data

All eyes will be on the crucial economic data such as inflation, manufacturing & industrial production number.

Vinod Nair, Head of Research at Geojit Financial Services, said: "The direction of the market in the week ahead will be determined by cues from the global markets as well as important macroeconomic data points, such as inflation and manufacturing & industrial production data, to be released next week. Domestic retail inflation is expected to rise to 6.9 per cent in August from 6.71 per cent in July."

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