Gift Nifty indicates another flat opening for the domestic markets. Nifty futures at Gift City is ruling at 24,660 against the NSE value of 24,644. As the results season has kicked in, the focus has shifted to the financial performance of the key companies. On Thursday, Infosys, Tata Technologies, Tata Communications, Havells India and Chat will declare their quarterly results. 

Analysts expect the market to move in a narrow range ahead of the Union Budget, which is scheduled for next week. Experts believe continuity of policy from the Finance Minister Nirmala Sitharaman will be the theme in the upcoming Budget, given the stable macros.

Vinay Paharia,CIO, PGIM India Mutual Fund, said: While the ruling BJP-led NDA government has come to power for the third time with a lower majority versus the previous term, recent policy actions and announcements signal stable government policy continuity as seen during the previous two tenures. The recent record dividend pay-out of Rs 2.1 lakh crore by the RBI to the Centre will enable the latter to continue on the path of fiscal consolidation in spite of increased government spending towards reviving rural demand, he said.

Steady macroeconomic indicators accompanied by strong corporate earnings growth and a stable policy environment have buoyed the markets to their all-time highs, he said. “We remain optimistic about the Indian equity markets on a medium- to long-term basis. However, valuations make us cautious about the near-term return potential. We are more comfortable with valuations for Large Caps versus that of the Mid Cap and Small Cap segments. Limited triggers for further valuation re-rating necessitates focus on capability of the companies to grow cash flows and earnings, while reinvesting the same at high rates of return. Companies that can deliver on this potential may continue to benefit from the broader macroeconomic and demographic tailwinds,” Paharia said.

Sector rotation seen

According to Osho Krishan, Senior Analyst - Technical & Derivatives, Angel One, there have been no significant developments in the benchmark index, indicating a lack of substantial price movement. Specifically, the price structure has remained stagnant within a narrow range. The Nifty’s trading range has shrunk to 80 points, making it more challenging for traders to navigate. However, despite this, the broader markets have continued to see active participation, which has contributed to maintaining a positive undertone for market participants.

“Currently, market participants are closely monitoring sectoral rotation and thematic movers, which play a pivotal role in driving market trends. It is advisable to continue observing and analysing these movements until the key indices show a resurgence in momentum. Furthermore, it is essential to maintain a keen watch on global developments following the mid-week holiday, as these factors could significantly influence and establish the initial market sentiment,” he said.

Meanwhile, analysts are also keeping an eye on the US Federal move.

Shrikant Chouhan, Head Equity Research, Kotak Securities, said, expectations are rife that the US Federal Reserve might begin cutting its key interest rate as early as September. “The Fed Chair Jerome Powell acknowledged that second-quarter inflation data has bolstered confidence that inflation would return sustainably to the bank’s 2 per cent target. Nevertheless, Powell emphasised the need for more positive data before committing to rate cuts. The US Retail Sales data for June, a crucial measure of consumer spending that influences consumer inflation, is estimated to have remained unchanged month-on-month.”

Meanwhile, US stocks closed on a mixed tone on Wednesday, with Dow closing higher, even as the Nasdaq and S&P500 slipped. Equities across the Asia-Pacific region are down in early deals on Thursday, led by Japan’s Nikkei that fell over 2 per cent.

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