Domestic markets are likely to open with a downward bias on Tuesday amid mixed global cues ahead of the US poll outcome.
Nandish Shah, Senior Derivative & Technical Research Analyst, HDFC Securities, said: Investors geared up for a busy week as a double dose of potentially market-moving events is expected during the week that includes the US presidential election and the Federal Reserve’s monetary policy meeting.”
Gift Nifty at 24,100 signals a flat to negative opening as Nifty futures on the NSE on Monday closed at 24,114.
Vinit Sambre, Head – Equities, DSP Mutual Fund, said: The markets have recently corrected by around 9-10%, with certain sectors like PSUs, engineering, and auto experiencing even sharper declines. The market had been on a strong upward trajectory, fuelled by continuous earnings growth, but results for the September quarter have fallen short of expectations, leading to earnings downgrades. This disappointing performance is primarily due to reduced government spending and slow consumption growth.
“Notably, urban consumption, which had previously remained resilient, is now also showing signs of slowing — adding to the pressure, especially as lower- to middle-income households have already been under stress. Heavy rains have been partly blamed for the slowdown, making it crucial to monitor the pace of recovery. If growth fails to pick up, it could pose further risks to both earnings and market performance,” he said.
Additionally, Foreign Institutional Investors (FIIs) have recently recorded the highest monthly outflows, which domestic investors are currently absorbing. “Our base case outlook is that markets may experience some additional weakness in the near term, but we anticipate a potential recovery after the Maharashtra election and with the onset of the festive season in October, which could boost consumption. Populist policies in some states due to upcoming state elections may also provide a lift to spending. The next two quarters will be key in setting the direction for the markets, with added volatility from the U.S. election expected to ease soon,” he further said.
Om Mehra, Technical Analyst, SAMCO Securities, said: The daily RSI remains in the oversold zone, while the weekly RSI has also dipped below 50, indicating weakening momentum. The trend becomes more fragile as the 10 DMA crosses over to the 20 DMA. Although a relief rally is anticipated in Nifty, resistance remains at 24,350 and 24,450. The support is placed at 23,750, with more substantial support around the 200 DMA near 23,500.
