Markets are likely to open on flattish to negative note amid global headwinds. Gift Nifty at 24,100 signals weakness at open for Nifty.
After three weeks of successive gain, analysts expect consolidation phase to continue. However, with settlement of F&O contracts round the corner (on June 30), analysts expect the market to remain volatile.
Ajit Mishra – SVP, Research, Religare Broking Ltd, said: Globally, markets remained volatile as investors balanced easing geopolitical concerns against expectations of a higher-for-longer interest rate environment in the United States. Initial weakness, triggered by technology-led selling and Fed-related uncertainty, gave way to improved sentiment following strong earnings and upbeat guidance from leading semiconductor companies, reviving optimism around the AI theme.
Mishra noted that this week, the market will be driven by a series of important domestic macroeconomic releases alongside global developments.
Market participants will closely monitor Industrial Production (IIP) data, government fiscal deficit numbers, the final HSBC Manufacturing, Services and Composite PMI readings, and the latest foreign exchange reserves data for fresh insights into the health of the domestic economy. Globally, the trajectory of crude oil prices, geopolitical developments in West Asia, and trends in FII flows will remain key drivers of market sentiment. Progress on a potential India–US trade agreement will also be closely watched,” he said.
Meanwhile, the slow down in FPI selling will help markets consolidate further, experts believe.
“A significant trend in FPI activity in the second half of this month is the tapering of FPI selling. During the last nine trading days from 15th June to 25th June FPIs were buyers in five days in the cash market even though the buying was in limited quantities. The big relentless FPI selling appears to be over, said Dr. V K Vijayakumar, Chief Investment Strategist, Geojit Investments Limited.
According to him, there are two factors responsible for this shift in FPI activity. One, rupee has stabilised and even appreciated from the low of 96.96 to the dollar reached on May 15th. Now the rupee is about 94.40 to the dollar. “ It doesn’t make sense for FPIs to sell when rupee is appreciating. Two, the big volatility in the South Korean and Taiwanese markets are forcing the FPIs to sell in these markets. On one day the South Korean market crashed by 8% triggering freeze of trade. FPIs sitting on big profits have been selling in South Korea and Taiwan. This is persuading FIIs to again consider India despite its relative weak earnings,” he added.
Meanwhile, equities across Asia Pacific region are down in early deal on Monday. Korea’s main index continues its downward slide.