Domestic markets are expected to remain buoyant on Tuesday as well, though analysts advise caution ahead of F&O monthly expiry. Gift Nifty at 25,970 signals a flat to positive opening for Nifty. Individual stocks may see heightened volatility due to rollover of open interest positions, they said.
Prashanth Tapse, Senior VP (Research), Mehta Equities Ltd, said: Investors extended their buying support for the third straight session as benchmark indices hit fresh highs amid gains in telecom, banking, realty and oil & gas shares. While the undertone remains bullish, intra-day volatility could intensify ahead of the monthly expiry on Thursday.
Meanwhile, China’s aggressive measures to revive economy will bolster liquidity and hence stock markets said analysts.
The Chinese central bank announced Tuesday a slew of measures aimed at reviving the sluggish economy by tackling a downturn in the property sector. Global media said the People’s Bank of China Governor Pan Gongsheng said the reserve requirement for banks would be cut by 0.5 percentage points and that the central bank would follow-up with further cuts. The central bank plans new policies to support stable development of the stock market, he further said. Pan also said down payment requirements for buyers of second homes would be reduced to 15% from 25% and that mortgage rates would be cut.
Following these announcements, major Asian stocks such as Japan and China are up in early trade on Tuesday, though Australia, Korea and Taiwan markets slipped a bit.
The domestic markets undertone remain bullish, with steady inflow of funds from both domestic and foreign investors, said analysts.
Osho Krishan, Senior Analyst - Technical & Derivatives, Angel One Ltd, said: the follow-up surge after the substantial weekly developments indicates a buoyant undertone of markets.
“Though the technical and derivative metrics are in extremely overbought terrain, which zooms out for a pragmatic approach. Additionally, as we headed into uncharted territory, projecting resilience seems a bit challenging. However, it is anticipated that the 26000 mark will pose a formidable barrier to the ongoing momentum. While any significant breach has the potential to propel the market further toward the 26200 zone, marking a sustained uptrend. On the lower end, the support base seems to upshift towards 25800-25750 on an intermediate basis, followed by 25650-25600 in the comparable period,” he said.
In light of the monthly expiry and overbought parameters, it is advisable to proactively secure profits at regular intervals instead of adopting a complacent approach, he cautioned investors. Additionally, the broader market exhibits significant sectoral movements that are poised to outperform. Therefore, it is imperative to maintain a stock-specific focus and vigilantly monitor global market developments, he further said.