Domestic markets are expected to open positive on Monday amid mixed global cues.
FPI sold Rs 1 lakh crore
Two primary concerns — foreign institutional investors (FIIs) selling and weak earnings — are expected to continue influencing sentiment into the coming week, said Ajit Mishra – SVP, Research, Religare Broking Ltd.
This month, the cumulative FPI selling in equity through the stock exchanges stood at a massive Rs 1,02,931 crore.
Gift Nifty at 24,223, as against Nifty Oct futures Friday’s close of 24,192.75, signals a marginal gain at the open.
VK Vijayakumar, Chief Investment Strategist at Geojit Financial Service, said sustained FPI selling impacted market sentiments, pulling the Nifty down by 8 per cent from its peak.
“FPIs are likely to continue their selling in the near term since the market sentiment has turned weak due to the escalation of tensions in the Middle East and the uncertainty regarding the outcome of the US presidential elections,” he added.“
According to Mishra, “Additionally, key players like Adani Ports, Bharti Airtel, Cipla, Dabur, and LT are set to announce their earnings, which will be closely watched. The upcoming expiry of October derivatives contracts is also expected to increase volatility, and with the new month, auto sales data will provide further cues.”.
Just 15% above 50-DMA
According to deep discount broker, SAS Online’s breadth analysis, Only 15 per cent of NSE stocks are trading above their 50-day moving average, and just 9 per cent are above their 20-day moving average, suggesting a possible relief but overall, a strong bearish grip. The brokerage said the number of stocks with RSI in the bullish zone has dropped to 20%, indicating exhaustion in upward momentum. Additionally, the Bull Bear Index of trend indicators like MACD also points to muted breadth, it further said.
For the coming week, a minor rebound is expected to be seen amid the sell-off, but it will face multiple resistances on the higher side for both indices. We maintain a cautious view with “sell on rise” strategy, it advised.
Although most sectors, except IT, remain under pressure, oversold conditions might trigger selective rebounds, according to Mishra. “Traders should continue with a “sell on rise” strategy and exercise extra caution, especially with midcap and smallcap stocks. Amid the prevailing negativity, investors may consider gradually accumulating high-quality stocks with a long-term investment horizon,” he added.
Equities across the Asia Pacific region are mixed despite escalating geopolitical tension between Israel and Iran. Japan stocks jumped as no party gained a majority in the election, fuelling weakness in the yen. Others in the region are marginally in green in the early deal on Monday.