The domestic markets are likely to open on a flat note on Tuesday. Gift Nifty at 19,770 indicates another positive opening for the domestic markets, as Nifty futures closed at 19,721.20 on the NSE on Monday. Analysts expect the consolidation phase to continue given the mixed global cues. The outperformance will continue for some time, as foreign portfolio investors maintain their faith in Indian equities, said analysts.
Among the Group of 20 nations, headline inflation seems to have peaked, according to the International Monetary Fund. However, in most G20 countries, particularly the advanced economies, core inflation remains well above the central banks’ targets, according to Vikas Jain, Senior Research Analyst at Reliance Securities.
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inflation eyed
“In the fight against inflation, there are some early signs of monetary policy transmitting to activity, with bank lending standards tightening in the euro area and the US. That said, policymakers should avoid ‘premature celebrations’: lessons from previous inflationary episodes show that easing policy too early can undo progress on inflation,” IMF Managing Director Kristalina Georgieva reportedly wrote in a Friday note. The IMF forecasts global growth over the medium-term to fall around 3 per cent, lower than the historical average of 3.8 per cent over 2000 to 2019.
US stocks are slightly higher after some disappointing Chinese GDP data raised concerns about the global economy, but supported the argument that disinflation pressures are firmly in place. “The disinflation story won’t be going away after Ford announced some big cuts with their electric F-150 truck prices. The disinflation process should remain intact and that should support calls that the Fed will be done after one more rate hike at the end of this month,” said Edward Moya, Senior Market Analyst, The Americas, OANDA.
Corporate events
Analysts expect stock-specific action will continue at the bourses, with a lot of corporate events such as the mega merger/ demerger (HDFC-HDFC Bank and Reliance Industries, Jio) and Q1 results.
According to Siddhartha Khemka, Head - Retail Research, Motilal Oswal Financial Services Ltd, “Overall, we expect the momentum to continue, with intermittent minor declines.”
The financial space will remain in focus on the expectation of good results from other BFSI heavyweights (Indusind Bank, ICICI Pru., ICICI Lombard and ICICI Bank this week) after HDFC and mid-sized banks reported impressive numbers, he said.
The IT sector would remain in focus with LTTS results due out today and Infosys on Thursday.
Volatility ahead?
“On the global front, investors will keep an eye on the release of US retail sales and IIP data, which will be released on Tuesday,” said Khemka.
India VIX has gained 6 per cent and with a number of index-pivotal companies to announce results during the week, we expect volatility to increase with respect to the quarterly results announcements, added Vikas Jain.