Indian benchmark indices, Sensex and Nifty, are expected to open flattish to negative on Friday. After a couple of days of gains, analysts expect profit booking. Besides, weak global sentiment will also keep the market under control. Gift Nifty at 23,390 signals a downward bias for Nifty. The next big trigger would be the Budget presentation, likely in the third week of July.
The market is hopefully waiting for a favourable union budget, which is likely to be announced next month, said Siddhartha Khemka, Head - of Retail Research, Motilal Oswal Financial Services Ltd. “Market has been consolidating over last few days with a positive bias and is slowly and gradually inching up. The uptrend is likely to continue supported by robust domestic macros, healthy monsoon prediction and strong earnings expectation,” he added.
However, analysts expect the activity is to centred around broader market, as select and mid and smallcap stocks are sustaining buying momentum.
Mythili Balakrishnan, Co-Fund Manager, Alchemy Capital Management, said: “It is important to highlight that the outperformance of midcaps and small caps is supported by robust earnings growth. Consensus anticipates the underlying earnings of midcap and smallcap indices to grow at a compound annual growth rate (CAGR) exceeding 20% over the fiscal year 2024 to 2026, surpassing the mid-teens growth seen in the Nifty 50 (Source: Ambit). The higher valuations of the midcap and smallcap indices reflect this stronger underlying earnings trajectory.
Additionally, sectors experiencing notable performance, such as real estate and defence, have a greater representation of small and midcap companies, contributing to the overall outperformance of midcaps and small caps, she said, adding, “Given the continuation of the government and strength in the domestic economy, we remain positive on the space.”
Rajesh Bhosale, Equity Technical Analyst at Angel One, said that traders are not particularly interested in index moves and are focusing instead on the broader markets, which remain active.
“It seems the Nifty has entered a time-wise correction phase after last week’s sharp up-surge. With no significant change in the technical setup and the undertone still bullish, we expect this consolidation to persist. In this context, the immediate range appears to be 23300 - 23500, possibly extending to 23200 - 23600 in the near term. Traders should monitor these levels, buying on dips and booking profits at higher levels,” he said.
Given the mid-cap and smallcap space’s favorable performance throughout the week, a stock-centric approach is advisable, though it is prudent to avoid carrying aggressive bets over the weekend, he further advised.
Meanwhile, global stocks are mixed. Equities across the Asia-Pacific region are largely flat, with trading with a downward bias.