The new week to begin on a positive note for domestic markets though mixed global cues are likely to keep market under leash. SGX Nifty at 18,860 (7 am IST) indicates that domestic markets are expected open a shade higher. However, volumes are likely to remain low, as traders await clear signal.
However, analysts expect market to remain in a range and see profit taking at gains ahead of crucial RBI monetary policy meet.
Deepak Agrawal, Chief Investment Officer, Debt Fund, KMAMC, said: we expect a 35 bps hike in the December policy, along with a change in monetary policy stance from “withdrawal of accommodation” to “neutral” indicating further action to be data-dependent. Post this hike, the overnight rates in India would have increased by 300 bps during CY2022.
Given the underlying high valuation, the US Fed policy and stringent Chinese Covid restrictions, the market will remain highly sensitive in the coming weeks, analysts said.
“The recent GDP numbers and GST collections came in line with expectations, but global news flow will continue to dictate the market trend going ahead. The two immediate triggers - RBI’s credit policy next week and the US Fed meeting in mid-December on the rate front would determine the investors’ mood in the near term,” said Amol Athawale, Deputy Vice President - Technical Research, Kotak Securities Ltd
However, continuous buying by foreign portfolio investors is likely help market move with positive bias.
Asian stocks are flat in early deal on Monday, with negative bias.
VK Vijayakumar, Chief Investment Strategist, Geojit Financial Services, said: a”FPIs turned strong buyers in November consistently buying financials, IT, autos, FMCG, capital goods and telecom. They were sellers in financials in October, but were buyers in November. There is no consistency in their sectoral selling strategy.”
In the short run, the most important factor determining FPI strategy is the movement in the dollar index, he said. “When the dollar index moves up and is expected to trend up, they sell. Conversely when the dollar index declines and is expected to trend down, they buy. Going forward, India will get its fair share of FPI money. But the high valuation in India will be a deterrent,” he added.