Indian markets are likely to open on a positive note, buoyed by a strong recovery in global markets. Analysts expect the snake-and-ladder game to continue at the bourses. With the result season almost ending and RBI monetary policy over, the market awaits fresh triggers to move on until domestic markets track global markets.
Emkay Global, in a note, said that India’s fortress balance sheet and unhindered growth prospects make it resilient to the current global uncertainty. “The rich valuations, though, could trigger a near-term correction, but that would be an entry opportunity. We remain bullish on Indian equities from a 2-3-year perspective. Manufacturing/SMIDs continue to outperform, albeit to a lesser extent, with more aggressive bouts of sector rotation.”
Gift Nifty at 24,350 indicates a strong gain of about 200 points, as Nifty August futures closed at 24,136 on Thursday.
“Some of our fears have played out with little impact on the market,” adding, “Going forward, the global risk-off, political instability, and regulatory risks are key worries that could trigger a short-term sell-off. If a correction does crystallize, we would see that as an entry opportunity for longer-term investors. The best places to hide from a possible correction are IT and FMCG, despite the elevated valuations – these sectors would correct less than manufacturing and cyclical.”
The Reserve Bank’s status quo stance was on the expected line, said analysts.
Apurva Sheth, Head of Market Perspectives and Research, SAMCO Securities, said RBI Treads Confidently but with Caution.
“The recently concluded monetary policy was a non-event as the RBI kept rates unchanged. Inflation has been on a downward trajectory but is still above the comfort level of 4%. The benefit of high base effect won’t be available in the coming quarter. Amidst all of this the RBI has decided to maintain a wait and watch approach which according to us is the right thing to do. The US Fed is expected to cut rates next month and many central bankers are likely to follow suit. But RBI made it clear that they will give local conditions prime importance before deciding anything on rate cuts. Thus, the continuation of their withdrawal of accommodation stance is welcome. Markets have also reacted positively as there isn’t any major surprise,” she added.
Technically, Nifty is stuck at a range, said experts. According to Nagaraj Shetti, Senior Technical Research Analyst at HDFC Securities, After showing an upside bounce on Wednesday, Nifty could not surpass the crucial hurdle of 24,350 levels and slipped into weakness on Thursday and closed the day lower by 180 points. After opening with a weak note, the market continued with a negative trend amidst range-bound action for the better part of the session. Intraday upside bounce in between was unsuccessful, and Nifty finally closed near the lows.
“A reasonable negative candle was formed on the daily chart with upper shadow, that is placed within a high low range of 24,350-24,000 levels. The crucial hurdle of the opening down gap of 5th Aug is still intact, the market was not able to break the lower end of that down gap around 24350 levels on the higher side.”
According to him, the short-term trend of Nifty remains choppy. “Lack of follow-through upmove and the presence of strong overhead resistance is signaling some more consolidation or weakness in the short term. A slide below 23,900 could open another round of downward correction. However, a decisive move above 24,350 levels could bring bulls back into action,” he cautioned.
Meanwhile, equities across the Asia Pacific region opened on a strong note. Most are up between 0.75 per cent and 2.75 per cent.