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The new week is expected to start on a negative note amid mixed global sentiment. Besides, analysts expect the holiday mood to keep volumes low at the bourses, as markets will remain shut on Wednesday on account of Dassehra.
SGX Nifty at 16,935 (7.30 am IST) indicates that the domestic bourses will open one per cent lower. Nifty futures on Friday closed at 17,103.
Domestic macro view
Domestic macro economic numbers came in strong, including GST collections, auto sales, especially passenger vehicles, and the RBI policy was neutral.
Ajit Mishra, VP - Research, Religare Broking Ltd, said: "The coming week is a holiday-shortened one and marks the beginning of the new month, so important data including auto sales, S&P Manufacturing PMI and S&P Services PMI will be in focus. Besides, the performance of global markets, FIIs trend, and movement in currency and crude will also remain on participants’ radar."
Global cues are not supportive, as US equity market indices ended at a fresh 52-week low. Global investors’ focus will be on the US Federal Reserves’s unscheduled meeting on Monday.
"It is anticipated that the closed meeting of the Board of Governors of the Federal Reserve System at 11:30 a.m on Monday, October 3, 2022, will be held under expedited procedures," the US Fed said. Amidst talk that major banks such as Credit Suisse are in deep trouble, analysts expect the Fed may chalk out some programme.
Focus on global cues
Santosh Meena, Head of Research, Swastika Investmart Ltd, said: "The dollar index has cooled off a little. The bulls need some support from global markets to continue Friday's momentum. The geopolitical situation, macro numbers from the US, the direction of the US dollar index, and bond yields will be key factors to watch out for at the global level."
"If we look at the derivatives data, FIIs began the October series with 87 per cent short positions in the index future, which is an extremely oversold level. However, it came down to 84 per cent in Friday's trading session. The put-call ratio is at a neutral level of 1.22," Santosh Meena added.
Mixed signals from Asia-Pacific stocks
Asian stocks are trading mixed in early deals on Monday. While Japan’s Nikkei eked out marginal gains, others, including the Australian markets, are trading in negative territory, but just marginally.
According to Mishra, It will be tough for markets to build on Friday’s rebound amid feeble global cues. "A lot would depend on how the banking and financial pack perform, as other sectors/ majors do not offer a decisive signal. We feel Nifty could extend this rebound to the 17,400-17,600 zone if it manages to surpass the crucial hurdle at 17,200, else profit-taking would resume. On the downside, 16,650-16,800 would continue to act as a cushion."
Meanwhile, it is prudent to stick largely with the defensive pack, viz. pharma and FMCG, and pick selectively from other sectors, he further said.
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