Amid mixed global cues, the Indian stock markets are expected to open on a cautious note. SGX Nifty at 15,987 (8 am) indicates that the Nifty may once again try to breach the 16,000-mark.
However, analysts say a weakening rupee is the major worrying factor as of now. Even FPIs who were selling aggressively, have mellowed down. Despite adverse conditions, FPIs turned net buyers on Thursday. This is a welcome development and signals that the downside may be limited.
Global stocks recover sharply
Once again, US stocks displayed their resilience, recovering to end flat after opening sharply lower. The Dow Jones Industrial Average, which opened over 600 points lower and hit a low of 30,143, recovered to close at 30,630, still down 0.46 per cent. Similarly, the S&P 500 closed marginally (0.30 per cent) lower. However, the Nasdaq closed in the green, recovering over 2 per cent from the intra-day low.
Asian stocks were mixed in early deals on Friday. While the Japan, China, Singapore and Taiwan markets are up marginally, equities across Australia, Korea and Hong Kong declined a tad.
Kishor Ostwal of CNI Research tweeted: “Strong pattern seen. Bad news getting digested. Markets fall but recovers. Dow did. SGX up... Yes but true that street players seem short trapped.”
Sector-specific action seen
According to analysts, action will be stock- and sector-specific.
The Head of Retail Research, Motilal Oswal Financial Services Ltd, Siddhartha Khemka, said while the monsoon’s progress has been good, the results season has been weak, with only IT companies reporting their numbers so far. The rupee remained under pressure and crossed the 80-mark due to continued FII selling.
“In the meantime, many commodity prices have cooled off by 30-40 per cent in recent weeks, thus providing relief to the FMCG sector. Even crude prices fell to below $100/barrel, which if it sustains, is positive for sectors such as paints, FMCG, cement, tyres and aviation. Auto sector stocks have gained momentum on the back of softening input costs. Pharma stocks are also witnessing fresh buying on account of sector rotation and attractive valuations,” he added.’‘
Ruchit Jain, Lead Research, 5Paisa.com, said: “Our markets have held above their crucial supports in spite of negative news such as higher inflation and a rising dollar Index. This divergence could now lead to the next leg of the upmove, if the market resumes the positive momentum.”
Nifty is placed near the upward sloping trendline support, adjoining the lows of June 20 and July 21, 2022. After a fall of almost 400 points, the Nifty is now near support, in the range of 15800-15900, where option writers have written put options. The immediate resistance is placed around 16,100 levels, followed by 16,275 levels, said Devarsh Vakil, Deputy Head Retail Research, HDFC Securities.