Domestic markets are expected open weak, as global stocks remain under pressure and yields rise due to fear of a prolonged firm interest rate regime. According to marketmen, global markets are likely to remain lacklustre with downward bias.
SGX Nifty at 17,850 indicates soft opening for the domestic markets as Nifty futures on Friday closed at 17,877. Asian markets in early trade indicates a negative bias, as equities across Japan and Korea New Zealand are down around 1 per cent, while others such as Australia and Taiwan are down between 0.2 and 0.5 per cent. The Chinese and Hong Kong markets are up. Major US futures are also down.
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IIP growth
Analysts expect limited upside for domestic markets unless some major triggers come. As macro economy numbers capture mixed signal, they expect benchmarks to hover around current levels with a downward bias.
The IIP growth printed at 4.3 per cent in December 2022, displaying a step up from the anemic average rise in the previous two months.
Aditi Nayar, Chief Economist, Head - Research & Outreach, ICRA Ltd. said: Going forward, the YoY growth in the IIP is likely to improve in the ongoing quarter (+2.4% YoY in Q3 FY2023), partly boosted by the typical year-end push in volumes to achieve targets as well as a low base of the third wave of Covid-19. However, we remain watchful of the impact of a slowdown in external demand and the consequent decline in merchandise exports on the performance of the manufacturing sector.”
FPIs slowdown selling?
Selling by foreign portfolio investors is another major cause for concern. However, according to analysts they had slowed down thier intensity.
VK Vijayakumar, Chief Investment Strategist, Geojit Financial Services, after massive selling of equity worth ₹53,887 crores in the cash market in January, FIIs slowed down their selling in February and turned buyers for ₹1,458 crore on February 10.
“It appears that the FPI strategy of shorting India and going long in cheaper markets like China, Hong Kong and South Korea is grinding to an end,” he said.
FIIs have been buyers in autos and auto accessories, construction and metals and mining. They have been consistent sellers in financial services.
In IT, selling in early January has changed to buying in late January and early February. It appears that the sustained FPI selling is slowly coming to an end, Vijayakumar added.