Domestic Markets Anticipated to Open Flat Amid Corporate Earnings Focus

The domestic markets are set to open on a stable note, influenced by mixed signals from global markets. The current emphasis has shifted toward corporate earnings as foreign portfolio investors engage in significant selling activities.

Market Overview

The outlook of the market will largely be influenced by crucial domestic and international economic indicators. Key data to watch includes the India Nikkei S&P Global Manufacturing PMI and Services PMI for October, the Reserve Bank of India (RBI) Monetary Policy Committee (MPC) Meeting Minutes, as well as US jobless claims and PMI figures. These indicators were highlighted by Palka Arora Chopra, Director of Master Capital Services Ltd.

Recent Market Performance

Last week, the stock market continued its losing streak for the third consecutive week. The Nifty50 index fell to its lowest level since August, closing 0.50% lower at 24,854. Meanwhile, the Sensex declined by approximately 0.20% to finish at 81,224.75. This downturn primarily resulted from disappointing quarterly earnings reported by key index constituents and lackluster domestic inflation figures, which stoked concerns about a postponement in potential rate cuts by the RBI.

Foreign Selling Pressure

Foreign portfolio investors have actively sold Indian equities, pulling out a staggering ₹77,701 crore (equivalent to $9.25 billion) in October up until the 18th, marking their continued net selling over 13 trading sessions this month. Nifty futures closed last Friday at 24,949.15, and the Gift Nifty was recorded at 24,925 during early morning trades on Monday.

Market Sentiment Analysis

Despite a robust recovery on Friday, the options market reflects a cautious sentiment. The prevalence of call writing (indicative of bearish activity) overshadows put writing (representative of bullish activity), suggesting traders are hesitant about pursuing further gains. Significant open interest is seen at the 25,000 strike calls (53.45 lakh contracts) and 24,000 puts (43.91 lakh contracts). According to Dhupesh Dhameja, Technical Analyst at SAMCO Securities, the put-call ratio has escalated to 0.75 from the previous 0.51, indicating a shift towards bearish sentiment.

Regional Market Trends

In the Asia-Pacific region, equity markets displayed mixed movements. Japanese and Korean markets saw marginal increases, while Hong Kong and Singapore markets encountered slight declines. Notably, Chinese markets remained relatively flat despite recent interest rate cuts.

Strategic Insights

Rajesh Bhosale, Equity Technical Analyst from Angel One, provided insights on the anticipated directional trends. If the Nifty index breaks below 24,600, it may affirm a “Head and Shoulders” pattern that signals potential market weakness. Conversely, a breakout over 25,250 could validate a minor double-bottom pattern and signal optimism ahead of the festive season.

Bhosale advises traders to await a clear breakout before making significant bets in either direction. In the meantime, a focus on specific stock opportunities is recommended, although caution is necessary due to the recent sharp declines in various individual stocks despite the broader bullish recovery observed.

Markets, Corporate, Investors