The inconsistent domestic markets are expected to close the week on higher note, thanks to strong global cues. According to analysts, investors are still analysing the negative impact of Fed's rate hike moves, though commodity prices, especially crude oil have started to cool down a bit.
Key factors to watch
Anaysts expect the technical pullback to continue for some more time. However, according to them, the sustainability of the rally depends on other key factors such economic growth, inflation and geopolitial tension.
Currently, the major concern for the market is unabated selling by foreign portfolio investors, said analysts. FPIs remained relentless sellers to the tune of over ₹2 lakh crore in Indian equities in 2022 so far. However, what is comforting is the agressive buying by domestic institutions by almost equal quantity.
“Fall in the crude oil prices gave some respite to the market, although concerns of persistent FII selling and rising bond yields in the US will continue to keep traders on the edge," said Shrikant Chouhan, Head of Equity, Kotak Securities.
Sea of green
SGX Nifty at 15,670 signals a strong opening for Indian markets, as Nifty futures on Thursday closed at 15,572. After a long while, Asia-Pacific stocks are in a sea of green in early trade on Friday. Led by Korean stocks that gained over 2 per cent, equities across Japan, China, Australia and Taiwan are up between 0.4 per cent and 2.3 per cent.
Overnight, the US stocks managed to close in the green after swinging between gains and losses.
IT, bank stocks down on FPI selling
Selling pressure from FIIs remain with IT and banking stocks witnessing the biggest sell-offs, where FII hold the biggest stake. Nifty IT index is down 20 per cent YTD while Nifty Bank has fallen 10 per cent, said Mitul Shah, Head Of Research at Reliance Securities.
According to Prashanth Tapse, Vice President (Research), Mehta Equities Ltd, the positive takeaway is that the benchmark Nifty continues to hold up relatively well and it appears that investors are looking forward to a recovery. "The market can move up for some time, but we suspect exhaustion will occur and that may lead to a major correction," he cautioned.