Nifty and Sensex signal recovery, tracking Asian markets

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Domestic markets are likely to remain volatile. Contracts at Gift City are swinging wildly and are currently in a positive zone as Asian stocks bounced back. Nifty futures at Gift Nifty is trading at 19,980 against Nifty November futures closing of 18,972.60 on NSE, signalling about 100 points gap down opening. Analysts said the market might open volatile and dip in early trading, but bottom fishing may happen in the latter half to help stocks end strongly.

Naveen Kulkarni, Chief Investment Officer, Axis Securities PMS, said: The market correction has been led by two primary factors: global geopolitical tensions and rising bond yields in the US markets. These challenges have a long-term impact on equities, but domestic factors in India remain encouraging. “Our near-term advice to investors is not to panic in this market. Stocks that are overvalued and lack quality should be sold. In contrast, he said quality businesses can be accumulated at these levels, adding that “focus on large caps and quality to navigate the current volatility in the equity markets.”

Despite a weak closing at the US market overnight, equities across the Asia-Pacific region are trading higher in the range of 0.5 to 1.3 per cent. Besides global uncertainty, analysts said the focus would be on corporates due to a result season.

Nifty heavyweights

Nifty companies having a combined weight of 15.4 per cent (Reliance 9.6%; Maruti 1.5%; – Bajaj Finserv 1 per cent; Dr Reddy’s, SBI Life 0.7 per cent each) will declare their earnings today.

Tensions in West Asia and sticky US Treasury yields at around 5% triggered risk-off sentiment, said Siddhartha Khemka, Head – Retail Research, Motilal Oswal Financial Services Ltd. Further mixed Q2 results, continued FIIs selling, rising oil prices, and near record high USDINR to above 83 have also dented investor sentiments. “Given the global uncertainties, there could be higher volatility in the near term and thus giving long term investors an opportunity to accumulate quality stocks at lower levels. We suggest to make higher allocation towards large caps as valuations are comfortable along with steady growth prospects,” he added.

According to Shrey Jain, Founder and CEO of SAS Online – India’s Deep Discount Broker, numerous obstacles are dragging the market down, from the fragility of global markets and fears of increasing US Treasury yields to rising geopolitical tensions and the monthly Futures and Options (F&O) expiry. These factors are collectively suppressing market performance. It’s a simple “wait and watch” moment. Given the current state, opening new positions is not advisable.



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