Domestic markets are expected open in positive territory on Tuesday, ahead of Budget presentation. Value-buying seen at lower levels from domestic investors is likely to keep markets in a range, said analysts. The key trigger could be Adani Enterprises’ ₹20,000-crore follow-on public offer. If the company manages to see full subscription, then the market will rejoice, as the group stocks have been battered in the last few days following adverse reports from Short-seller Hindenburg.
SGX NIfty at 17,780 indicates mildly positive opening for domestic markets as Nifty futures on Monday closed at 17,740.
However, the Union Budget on Wednesday and Federal Rerserve decision will bind market directions. Though the US stocks closed in red overnight, analysts expect the soft approach from the Fed that could trigger a momentary relief rally across countries. Economic Survey will be tabled on Parliament today, which can give some light about overall macro picture of Indian economy.
Volatility index surges
India VIX is trading above 17 levels indicating increase in volatility. “Hence, it seems that the market now has light positions ahead of the Union Budget event as the broader markets have corrected sharply in last few sessions. Thus, the event (Budget) could be a major trigger for the next directional move,” said Ruchit Jain ,Lead Research, 5paisa.com.
Analysts expect a moderation in rate hike by the US Federal Reserve. More than its action, focus will be on Fed’s comments, said experts.
ICICI Securities in a note said: “We expect the Fed to dial back the pace of hike and increase rates by 25 bps to a range between 4.50 per cent and 4.75 per cent as recent economic data from the US signals that the economy is feeling the heat of a rate hike and lagged effect of Fed aggressive stance are beginning to take their toll.”
Even the CME fed watch tool indicates more than 99% probability of 25 bps rate hike in the February meeting. Meanwhile, markets will try to find answers to how much rate hike is left and are policymakers convinced with moderating inflation, it added.
FPI selling
The major cause for concern for domestic markets is the unabated selling by FPIs. Foreign investors have sold over ₹13,000-crore in Indian securities (equity, debt and Hybrid), in 2023 so far.
The global markets have been doing well recently but the FII’s selling in the Indian markets has been a cause of concern, said Ruchit Jain. “They have been selling in cash segment and have formed shorts in index futures segment too which has mainly led to our markets underperformance. Whether they continue with their negative approach or cover the short positions around the event needs to be seen,” he further said.