The fresh week is likely to open on a negative note for domestic markets, amid mixed global cues. SGX Nifty at 18,200 indicates a downward bias for the Nifty and Sensex, as Nifty June futures and May futures on Friday closed at 18300 and 18231. The withdrawal of ₹2,000 from the system is likely to have no impact on the markets, most analysts said and adding that a few sectors such banks and realty may see some action initially.

However, this week being settlement for F&O May contracts on the NSE, analysts expect volatility to continue and action well be centered around individual stocks. 

Global stocks

 The US stocks turned negative after key negotiators for Speaker Kevin McCarthy left a closed door debt ceiling meeting with White House representatives noting that they were not being “reasonable.” 

Edward Moya, Senior Market Analyst, The Americas OANDA, said: “Finally, we are seeing posturing and some heated debate for this debt deal. A big risk for debt-limit talks were that negotiations were too easy and that could have triggered an early vote which could have led to a similar reaction to the early vote on TARP that happened during the GFC. Wall Street has seen this movie before and we needed to see some tension amongst negotiators, in order for a reasonable deal to be reached.”

Meanwhile, equities are mixed in Asia Pacific region. While Chinese markets are up, Australian stocks are down while others such as Japan, Taiwan and Korean equities are flat but in the negative region.

The continuous buying by foreign portfolio investors will help market said analysts.

Crucial factors

Vinod Nair, Head of Research at Geojit Financial services, said: the domestic market’s rally, supported by FIIs & domestic investor inflows, faced headwinds this week from weak cues in global markets. 

According to him, the moderation in domestic inflation reaffirmed the central bank’s decision to maintain a pause on rate hikes. India’s industrial production growth slowed from 5.6 per cent in February to 1.1 per cent in March, mainly due to weaker performance in the power and manufacturing sectors. Nifty50 stocks that have reported results so far witnessed earnings growth of 9.7 per cent, falling short of the estimated 10.6 per cent, while the Nifty 500’s earnings improved by 11.7 per cent compared to the estimated 8.9 per cent, indicating the outperformance of mid- and small-caps.

“The US market grappled with concerns of a potential recession and uncertainties surrounding debt ceiling talks. However, positive developments in both areas later boosted the US markets. Despite market fluctuations, FIIs continued to provide support to the domestic market. The lower levels of India’s VIX reflect market stability, instilling investor confidence and promoting long-term investments,” he added.

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