Domestic markets are expected to open on a positive note despite mixed global cues. Trading at Gift City indicates a gap up opening 80 points. As there are no key domestic triggers (result season and RBI meet—major events are over), only global sentiment will anchor the market movement, said analysts.
Experts believe global sentiment is likely to be positive as the fears of recession in the US have receded. Goldman Sachs Group Inc. economists lowered the probability of a US recession in the next year to 20% from 25 per cent, citing this week’s retail sales and jobless claims data
Nifty50 and Sensex reversed their downward trend last week, ending a two-week losing streak to close in positive territory. ”The rally in the benchmark indices was driven by a confluence of factors, including strong US economic data, easing inflation in India, and stability in the Japanese yen. In terms of market participation, Foreign Institutional Investors (FIIs) were net sellers, offloading ₹8,616 crore in the cash segment last week. Meanwhile, Domestic Institutional Investors (DIIs) maintained their buying momentum, acquiring ₹10,560 crore in the cash segment,” said Palka Arora Chopra, Director of Master Capital Services Ltd.
This week, key factors to watch out for are domestic and global economic data such as HSBC India Services PMI (Aug), HSBC India Manufacturing PMI (Aug) US Crude Oil Inventories, FOMC Meeting Minutes, S&P Global Services PMI (Aug), US Existing Home Sales (Jul) and US New Home Sales data, she added.
After selling continuously for nearly ten days, foreign portfolio investors turned buyers on Friday, albeit marginally (Rs 766 crore) in the cash segment.
Dr. V K Vijayakumar, Chief Investment Strategist, Geojit Financial Services, said: In August till 17th, FPIs have sold equity for Rs 32,684 crores through the exchange even while investing Rs 11,483 crores through the primary market & others category. “This trend is likely to continue since India is the most expensive market in the world now, and it is rational for FPIs to sell here and move the money to cheaper markets.” This picture doesn’t change even if the market turns more bullish on fears regarding US recession receding.” he said, adding that “So FPIs are buying when securities are available at fair valuations and selling when the valuations get stretched in the secondary market.”
Q1 results were largely underwhelming, said analysts.
The Q1-FY25 earnings season was weak, with negative PAT growth, according to Emkay Global Financial. “Topline momentum remained muted across the board, while energy dragged overall margins. The share of negative surprises spiked. The good news, however, is that earnings forecasts for the Nifty and the wider universe remained stable. Though valuations have moderated after the recent correction, we do not see a decisive short term up-move unless the earnings upgrade cycle restarts. We, however, remain constructive on the markets from a >1Y perspective,” the domestic brokerage said.
Meanwhile, equities in the Asia-Pacific region are mixed. Japan and Australian stocks are down marginally, while Singapore stocks eke out marginal gains.
Aditi Gupta, an economist at Bank of Baroda, has released a study on corporate performance for Q1-FY25. The key highlights include an improvement in sales growth to 7.7% compared to 2.3% in Q1 FY24, a deceleration in growth of both PBT and PAT, a marginal decline in ICR to 5.76, and signs of recovery in rural demand and industries like textiles, chemicals, and paper products. However, industries such as crude oil, cement, iron, and steel have significantly affected overall performance.
