Domestic markets are likely to open on a flat note on Tuesday, amid mixed global cues.
With TCS set to declare its results on Wednesday, the focus will shift to quarterly/full-year results of India Inc. Analysts will closely watch the management comments and outlook for the current fiscal.
Cyclical recovery
Quantum Mutual Fund in a note said that it continues to believe that the current market backdrop of relatively higher interest rates and broad-based growth suits value as a style.
“Our portfolio is positioned for a cyclical recovery in the Indian economy. We are positive on consumer discretionary especially 2-wheelers, which trade at attractive valuations; Financials which can benefit from capex recovery and IT Services,” it said.
SGX Nifty at 17,710 indicates a flat-to-positive opening for domestic markets, as Nifty futures on Monday closed at 17,681.50. However, analysts said the market may struggle to hold on to initial gains on Tuesday due to a sharp rise in the last six days that may force investors to book profits.
However, analysts fear the below-normal monsoon prediction by weather agencies may hurt sentiment.
Undertone remains bullish
India is expected to get a ‘below normal’ monsoon this year, according to private weather forecaster Skymet, adding another potential risk to the economy.
Skymet expects the upcoming monsoon to be 94 per cent (with an error margin of +/-5 per cent) of the long-period average of 868.6 mm for the four-month period from June to September, with the spread of below normal being 90-95 per cent of LPA.
“Nifty seems to have run out of steam after a rise over the last six sessions. Though the uptrend has not reversed so far, it could be rocky from now on,” said Deepak Jasani, Head of Retail Research, HDFC Securities.
Siddhartha Khemka, Head-Retail Research, Motilal Oswal Financial Services Ltd, said the undertone of the market continues to remain positive on the back of the expectation of a healthy Q4 earning season. Investors would keep a watch on several economic data including US, China & India Inflation, UK GDP, and FOMC.
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FPIs turn buyers
Foreign portfolio investors have been buyers in FY24 so far. This is a good sign said analysts. As long as they support the downside is limited, they added.
According to Quantum MF, the key near-term monitorable for the markets are private capex trends, rural recovery, inflation trajectory, and subsequent central bank actions. “We remain constructive on Indian equities with a long-term perspective,” it added.
businessline reported yesterday that in two years, FPIs pull out over ₹1-lakh crore from Indian IT sector.