Bears appear tired, bulls yet to gain confidence, say analysts
Another dull day is on the cards, as the market is likely to open weak on Tuesday. According to analysts, while bears appear tired now, bulls are yet to gain confidence. So, the market is indecisive and volatile, they added.
SGX Nifty at 16,460 signals a gap down opening of about 120 points, as Nifty futures on Monday closed at 16,581. Overnight, the US stocks closed flat after a strong opening. Asia-Pacific stocks in early deal on Tuesday are mixed. While Japanese stocks are up, Korea, Taiwan and Australian stocks are down.
Volatility to continue
Navneet Munot, MD and CEO of HDFC Asset Management Company, said: for Indian equities, strong retail participation (63 per cent increase in Demat accounts in FY22) and robust Mutual Fund flows have cushioned the downside from recent FPI selling spree.
Considering rapidly evolving geo-political landscape, change in course of globalisation; and with Central Banks retreating into their role of reining in inflationary expectations instead of doing ‘whatever it takes’ to support asset markets, volatility is likely to remain elevated, he said.
“Investors’ equanimity and patience will continue to be tested in the foreseeable future but don’t we know from history that the formula for wealth creation equates sound investment + time + patience, he added.
Eyes on central bankers
And all eyes are on RBI and the US Fed, in which further rate hike is expected. The RBI will announce its monetary policy outcome on June 8.
Mitul Shah, Head Of Research at Reliance Securities, said: “The Indian equities will likely see another tumultuous week as the central bank would take its strict stance in an attempt to curb inflationary pressures.”
RBI is looking at another phase of coordinated action between fiscal and monetary authoritiesThe primary focus will be on central banks’ policy measures to stabilise inflation, he said.
‘Inflation & Rupee’
According to Mohit Batra, Founder & CEO of MarketsMojo, RBI will try to tackle two issues in its upcoming monetary policy – tackle inflation and ensure that the rupee does not depreciate too much against the dollar. The last time when RBI revised its inflation target, crude was at $100 per barrel, and now it’s trading at $120 per barrel, suggesting a risk of inflation flaring up is high. “Keeping these facts like rupee depreciation and high inflation rate, I expect RBI to hike the interest rate by 50bps,” he added.
Shrikant Chouhan, Head of Equity Research (Retail), Kotak Securities Ltd, said: “Basically, the market has been exercising caution ahead of the credit policy announcement, and hence investors trimmed their position in rate-sensitive sectors such as realty.