Another lacklustre day is on the cards for the domestic markets, amid weak global cues. Though the market is expected to open flat, analysts expect profit-taking at higher levels.
With both foreign portfolio investors and domestic institutional institutions turning buyers, analysts expect a little downside from current levels.
Strong fund flows
Srikanth Subramanian, CEO, Kotak Cherry said, Indian equity markets are standing resilient and firm as compared to volatility all across the globe.
“We are also the recipients of strong inflows from FIIs and our domestic SIP book continues to hold strong. It’s a clear indicator of the world’s belief in the Indian growth market,” he said.
All eyes are on Nifty, whether will it breach its all-time high level today. The index is tantalisingly close to its all-time peak level of 18,887.60 which it registered on December 1, 2022. On the other hand, the BSE Sensex on Wednesday created a new peak at 63,588.31
‘Be cautious’
“However, one should keep in mind that flows are usually a manifestation of what’s expected which can be different than reality. While it’s a happy moment for all growth investors in India, it’s also a time to be extra vigilant given the rich premiums and valuations. Continued staggering investment could be one way to balance the risk and reward,” Subramanian cautioned.
SGX Nifty at 18,870 signals a downward bias at the opening as Nifty futures on Wednesday closed at 18,896.75. Asian stocks are mixed with Japan, Australian, and Chinese markets are down even as Korea and Taiwan are up in early deals on Thursday.
Powell speak
Overnight, the US stocks declined as Fed Chair Jerome Powell’s testimony to the House affirmed the Fed’s threat of higher rates to combat inflation.
“Wall Street should not have been surprised by Powell’s commitment to vanquish inflation, but swap futures are still only pricing in one more rate hike. Powell reiterated that the economy is strong but that inflation remains elevated,” said Edward Moya, Senior Market Analyst, The Americas OANDA.
The Fed is clearly not nearing the end of its tightening cycle and if other Central banks seem poised to deliver more than a couple of rate hikes, that might make it easier for the Fed to remain aggressive with tightening. Powell said lowering inflation has a long way to go and that could very well mean that they won’t stop until the fall, he said.
Technically
Rupak De, Senior Technical at LKP Securities said, on Wednesday, the Nifty index experienced a largely flat and sideways movement.
Despite this, the overall trend remains positive as the index managed to stay above the 18,800 level, which is considered immediate support. In the short term, a crucial support level is observed at 18,700, where a substantial number of put writers have shown their presence, he said.
“This suggests that there is a significant amount of buying interest and support at that level. On the higher end, a resistance level is noted at 19,000, where call writers are waiting to defend the price level. This indicates that there may be selling pressure and a potential hurdle for the index to surpass. A rise above 19,000 may induce further rally in the market,” he added.
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