Domestic benchmarks are likely to start the week on a positive note, tracking global cues. At 18,025, SGX Nifty indicates that NSE Nifty will test the 18,000-levels on Monday. Following a sharp recovery in the US markets on Friday, stock markets opened on strong a note in the Asia-Pacific region.
According to experts, the stock markets will maintain a bullish momentum as the global markets have discounted Fed’s steep rate hike proposals.
Momentum to continue
This week is going to be critical for markets for multiple reasons.
“We have two important events—US Fed meet and a special meeting of the RBI’s Monetary Policy Committe,” said Ajit Mishra, VP-Research, Religare Broking.
Vinod Nair, Head of Research at Geojit Financial Services, said the expectation that the central banks would slow down the pace of rate hikes from the beginning of CY23 gave comfort to the global markets.
As a result, bond yields across the globe softened, with the US 10 year-yield diving below 4 per cent.
“The strengthening rupee, along with a softening treasury yield and decent Q2 earnings results, will support the domestic market in the near-term,” he added.
US tech majors report weak results
“The bloodbath in tech stocks is over and Wall Street still seems to be confident that the Fed is ready to downshift their tightening pace after they deliver a fourth consecutive 75 bps rate hike next week,” said Edward Moya, Senior Market Analyst, The Americas OANDA.
“The labour market needs to weaken significantly before the Fed can have a slower pace of tightening. This Apple-led rally is somewhat surprising given the mediocre results and holes in the outlook. When you compare Apple’s earnings to Meta and Amazon, it does look a lot better,” he cautioned.
Buy-on-dips?
However, the focus of domestic participants will be on RBI’s unscheduled meet on Thursday (November 03).
“The RBI needs to draft a letter explaining to the government why inflation has been above tolerance band for nine months, steps that would be taken to rein in inflation and the time frame to bring inflation rate to the tolerance band,” IFA Global said, adding “While the Nifty is encountering resistance around 17800-17900, we expect the bullish momentum to continue and the resistance to eventually give way in the coming week.”
According to Ajit Mishra, though the markets have been inching gradually higher, a mixed trend across the index heavyweights keeping the momentum in check.
“Traders should continue with the “buy on dips” approach with a focus on overnight risk management,” he added.