Markets are expected to open on a flat note on Friday amid weak global markets. Domestic markets have been falling for the fifth straight day due to adverse global sentiment and fear of the election outcome. US stocks continued their slide, and on Thursday, the Dow fell over 300 points, and the Nasdaq tumbled over 1 per cent or 183 points.

However, ignoring the US market sentiment, equities across the Asia-Pacific region opened on a positive note on Friday.

Nifty futures at Gift City at 22,690 indicate a marginal gain for domestic markets, as Nifty June futures closed at 22,627. Today will also see the introduction of a fresh monthly series at the NSE (August).

According to analysts, with the result season over for India Inc., the focus has now shifted to the general election. The last phase of the election will be held on Saturday, and the result will be out on June 4. Exit polls by various channels will be declared on Saturday evening, setting the trend for markets next week. However, they said the market is expected to remain lacklustre on Friday. They cautioned that the renewed selling by foreign portfolio investors will add to the worry.

Ashwin Ramani, Derivatives & Technical Analyst, SAMCO Securities, said: Nifty continued its slide for the second consecutive day and closed 216 points lower at 22,489. The India VIX closed flat at 24.19.

“The long short ratio (LSR) of Foreign Portfolio Investors (FPIs) fell to 49.50 per cent on May 29 from 53.96 per cent on May 28 as they liquidated some existing long positions in Index futures,” he added.

According to Nuvmaa Alternative & Quantitative Research, Nifty futures rollovers stood at 72 per cent vs 71 per cent (last three series). Nifty futures will start the June series at a higher OI base of ₹32,500 crore (1.44 crore shares) vs. OI of ₹28,000 crore (1.24 crore shares) seen at the start of the May series.

Market-wide futures open interest at the start of the June series stands at ₹4.064-lakh crore (historic highs) as compared to ₹3.945-lakh crore at the start of the May series. Market-wide rollovers is at 88 per cent, lower than the 3M avg. of 89 per cent, report said.

“The May series has undoubtedly been exciting, as the onset of general elections usually leads to excessive volatility. During the May series, the Nifty index traded in a range of 1,300 points and reached an all-time high on May 27. However, before the election results on June 4, the markets started to book profits amid a surge in the India VIX, according to the Nuvama rollover report.

The Put-Call ratio (PCR), known as the sentiment indicator, fell to 0.52 at the close on Thursday, indicating call writers’ dominance. Five trading sessions back, the PCR had made a high of 1.34, Ramani said.

The call writers (Bears) still have sizeable positions at the 22,500 Strike, and the option activity at this strike will provide cues about Nifty’s future direction, he further said.

After a sharp correction currently, according to Shrikant Chouhan, Head of Equity Research at Kotak Securities, the market is trading near the 20-day SMA (Simple Moving Average). “We are of the view that, the market has completed one leg of correction and for the traders now 20-day SMA or 22450/73800 would act as trend decider level.”

He warned that short-term traders should remain cautious and selective as there is a risk of getting trapped at lower levels.

According to Nuvama, HNIs/Retail goes fearlessly long in Index and SSF (at record highs of $19.4 billion); and FIIs maintain a very cautious stance (SSF longs are hedged with historic high Index shorts).

Nuvama expects broader markets to outperform and Indices to trade in a range.

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