In light of the turmoil on the international stock markets, domestic benchmarks are anticipated to open on Friday with a neutral tone and a negative bias. However, experts believe that despite concerns about valuation, Indian markets will be able to withstand pressure.
US markets plunged for a second day in a row after the chairman of the US Federal Reserve made a hawkish remark. As the Bank of England increased interest rates by an additional 0.75 percentage points, stocks throughout Europe also experienced losses.
SGX Nifty’s beginning price of 18,098 against Nifty Futures’ closing price of 18,118 on Thursday implies a flat to negative performance.
The majority of the stocks in the Asia Pacific region opened Friday slightly lower, with the exception of Japan’s Nikkei, which fell more than 2%.
According to analysts, local markets will continue to consolidate because the majority of the drawbacks have already been taken into account. However, until the current state of global uncertainty is resolved, there will be a downward tilt, and stock and sector-specific action will persist.
Fed’s stance
According to Akhil Mittal, senior investment manager at Tata Mutual Fund, the US Federal Reserve raised interest rates by 75 basis points as anticipated and kept inflation control as its top priority.
The market was anticipating a little dovish tone from the Federal Reserve, but no such hint was given. The Federal Reserve’s tone, though, wasn’t particularly hawkish either. We now predict that the central bank may not continue to make 75 bps changes, but the pivot may change to 5% instead of 4.5–5%,” he added.
Analysts claimed that India’s fundamentals are still strong and that foreign portfolio investors have already begun to build up.
Eyes on US stocks
However, several analysts issued a warning, stating that Indian markets cannot continue to outperform the global sell-off for very long.
The short-term trend for our markets is still in place as of right now, but if we look at the US markets, it appears that the Nasdaq Index has resumed its downtrend following a pullback move, and it may even break the recent swing lows in the future, according to Ruchit Jain, Lead Researcher at 5paisa.com. If it does, the global equities may also respond negatively, therefore short-term traders should continue to remain alert to global cues.
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