Domestic markets are expected to open with marginal gains on Monday, thanks to positive global cues. According to anlaysts, global events are likely to navigate domestic markets in the short term.

In the short term, the focus will be on US Federal Reserve, which will deliberate on monetary policy this week. As the Fed will declare the outcome of the meeting on June 14, analysts expect domest markets to move in a range till the event.

Domestic rating agency arm, Care Edge, in a note said that looking at the state of the economy at the current juncture, it is reasonable to assume that the Federal Reserve may not achieve its inflation target without hurting the economy.

Also read: Global 360: Fed meeting outcome to determine the trend

“The combined effect of past rate hikes and reduced credit availability is expected to lead to a deterioration in growth and employment in 2023, the latter of which has already begun playing out. At the May FOMC meeting, the Fed hinted at keeping rates higher for longer, by, on one hand dropping the reference to ‘additional policy firming’ post a 25 bps hike, and on the other, pushing back against the possibility of rate cuts,” it added.

SGX Nifty at 18,687 indicates a gap up opening of about 50 points for Nifty. Most Asian stocks are up in early deal on Monday.

Experts said that the inflow from foreign portfolio investors that helped the Indian stocks recover sharply may slow down, given the valuation.

According to V K Vijayakumar, Chief Investment Strategist, Geojit Financial Services, sustained buying by FPIs has lifted the Nifty by about 10% from the March lows and consequently, valuations, viewed from the short-term perspective, have become challenging. Therefore, FPIs are likely to slow down in the coming days.

Also read: Inflation, IIP data, US Fed decision major factors to guide markets this week: Analysts

Bandhan Bank Mutual Fund, for its June month outlook, said the Indian market has bounced back strongly in absolute terms and relative to emerging markets.

“Key reasons for this we believe are - the improving external accounts situation due to the fall in energy prices and robust service exports, which has made the currency outlook positive, continued economic momentum in India, whereas many countries are slowing down and the disappointment on China growth where after the Covid restrictions going away, the economic rebound has disappointed.”

It believes these factors will continue to drive India’s growth outperformance but key risks are - the monsoon outlook and state elections at the end of the year, the fund house added.

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