Equity benchmarks are likely to sustain the bullish momentum on Tuesday as foreign portfolio investors’ have been buying.
SGX Nifty at 18,170 indicates a gap-up opening of 100 points for Nifty futures, which closed at 18,054 on Monday.
Though the US stocks closed in the negative, Asia-Pacific stocks opened in green, with indices in Hong Kong, Korea and Singapore gaining over one per cent.
According to Choice International, the positive momentum is likely to continue. However, profit booking at higher-levels is also anticipated.
Sensex at 60k
Analysts said that market has discounted most of the negatives, including Fed’s rate hike, modest earning by corporates, geopolitical tensions and high inflation levels.
VK Vijayakumar, Chief Investment Strategist, Geojit Financial Services, said the ongoing rally which has taken the BSE Sensex above 60,000-mark has been triggered by the rally in the mother market US where the Dow has recorded four straight weeks of gains.
“This US market rally, in turn, has been triggered by the strong US Q3 GDP data which surprised on the upside with a 2.6 per cent growth. The market which had discounted an immediate recession is now discounting a possibility of a soft landing for the US economy, that is, the Fed might succeed in taming inflation without pushing the economy into recession,” he added.
Core sector growth
“In India, FPIs turning buyers is another positive for markets. Short covering can take the market higher. But at higher levels there will be institutional selling putting a cap on the rally. Some profit booking is advisable on rallies,” Vijayakumar added.
Meanwhile, the core sector growth accelerated to 7.9 per cent (y-o-y) in September.
In comparison to the pre-pandemic period of September 2019, the output of eight core industries registered a double-digit growth of 14.4 per cent . A pre-pandemic comparison reveals that sectors such as coal, steel, cement, and electricity have been driving growth in the infrastructure index in the last few months.
A sequential improvement in cement output (4.4 per cent) in September is encouraging, said Rajani Sinha, Chief Economist, Care Edge.
Profit taking on the cards
Siddhartha Khemka, Head-Retail Research, Motilal Oswal Financial Services Ltd, said: “Series of events over the next few days could keep the market volatile. Central banks, including US Fed and Bank of England would be having their policy meet, while RBI has also scheduled an emergency meeting after it failed to contain inflation for three consecutive quarters. Apart from that, US inflation and Jobs data would also be monitored closely.”
“On the domestic front, there is buzz in the primary market with at least four companies have lined up their IPOs. Going ahead, Indian markets are likely to continue with its positive momentum with strong corporate earnings, supportive global markets and healthy festive demand,” Khemka added.