SGX Nifty indicates a little downward bias on Monday for domestic markets. However, experts believe the markets see a limited downside only for benchmark indices, as according to them, it appears, most of the negatives (such as the Adani saga, high inflation, rising interest rates, and geopolitical tensions) being priced in.
In the upcoming week, a major trigger in the domestic market would be the RBI’s rate decision and their commentary on future rate actions, where the market is widely expecting a rate hike of 25 basis points, said analysts. RBI’s rate-setting panel – Monetary Policy Committee (MPC) – will start its three-day deliberations on the next set of monetary policy on Monday. The decision will be announced on February 8.
The Budget turned out to be far better than expected. But the market couldn’t hold on to the gains since the Adani stock crisis impacted sentiments, they added.
According to market experts, there are no major disappointments on Q3 results front as well. Though India Inc displayed a strong growth on top lines but profit came under pressure due to high costs.
Also read:India Inc may step up rupee-denominated green bond issuances in FY24
Global cues are mixed with US stocks showing some resilient even as European and Asian markets remain volatile.
The major concern is selling by foreign portfolio investors. So far, their unrelented selling is equally matched by domestic institutions and investors.
The massive FPI selling in Indian markets impacted market sentiments, said VK Vijayakumar, Chief Investment Strategist, Geojit Financial Services. “FPIs sold in the cash market a mammoth ₹53,887 crore in January and followed up this with ₹3,212 crore of selling in February so far,” he added.
FPIs are selling in India and buying in cheaper markets like China, Hong Kong, and South Korea where valuations are attractive. This “short India and long other cheaper markets” strategy has led to big underperformance of the Indian market, so far this year.
However, this kind of underperformance is unlikely to last long. “FIIs have also been hugely short in the derivatives market,” he added.