The domestic markets are expected to edge lower at opening on Friday amid profit-taking and a lack of clear cues from global markets. With US stocks struggling to find direction, most Asian stocks opened lower in early deals on Friday.
SGX Nifty at 18,950 (at 7 am IST) suggests a flat opening.
According to analysts, despite a strong rally in the last few days, domestic markets are expected to see consolidation. The BSE Sensex and NSE Nifty appear tired following the recent rally, and action is likely to shift to the small-cap and mid-cap space, they added.
Ruchit Jain, Lead Research, 5paisa.com said: “Our markets continued to hit record highs as the global markets reacted positively to the Fed Chairman’s statement on the possibility of smaller interest rate hikes going ahead.”
Nifty is just a distance away from testing the 19000 mark, which would be another milestone, he said and added: “However, from a short-term perspective, the momentum readings on the lower timeframe chart have reached the overbought zone, which needs to cool-off.”
Mixed US stocks
US stocks were unable to hold onto their earlier gains as Wall Street digested a swathe of economic data that showed inflation is easing and the labour market is cooling, said Edward Moya, Senior Market Analyst, The Americas OANDA. “It’s been a nice rally, but no one wants to be aggressively bullish heading into the NFP report,” he added.
US stocks on Thursday closed mixed, with Nasdaq ending marginally in the green, even as the Dow and S&P slipped.
Healthy macro numbers
Back home, healthy GST collections, a strong PMI manufacturing number and positive auto sales are keeping investors buoyant. Goods and Services Tax (GST) collections for November 2022 stood at ₹1,45,867 crore, according to data shared by the Finance Ministry on Thursday.
The seasonally adjusted S&P Global India Manufacturing Purchasing Managers’ Index at 55.7 in November, up from 55.3 in October, signalled the strongest improvement in operating conditions for three months.
Siddhartha Khemka, Head - Retail Research, Motilal Oswal Financial Services Ltd, said: Nifty, after moving up by 4 per cent in the last eight sessions, can witness some consolidation around the 19K mark.
“Expect momentum to continue in global sectors such as IT and metals. Also real estate, cement and building material stocks are expected to do well on the back of strong housing demand,” he said.