Indian Stock Markets Poised for Modest Gains Amid Global and Domestic Influences
The Indian stock markets are set to open with modest gains, as indicated by GIFT Nifty, which suggests a rise of 15.50 points at the opening bell. This expected uptick comes amidst a backdrop of mixed global and domestic market dynamics.
Global Market Trends
Asian stocks have generally shown positive momentum due to easing US consumer inflation expectations, which bolsters the case for the Federal Reserve to cut rates later this year.
On Friday, US markets closed on a high note with the Nasdaq achieving a fifth consecutive week of gains, propelled by an improving consumer outlook on inflation. The Dow Jones Industrial Average also edged up slightly, while the S&P 500 gained modestly.
The University of Michigan reported that consumers now expect prices to climb at a 3.3% annual rate over the next year, a decrease from the 3.5% expected earlier. This suggests easing inflation pressures, contributing to the positive sentiment in the markets.
In India, the equity benchmarks experienced a volatile session recently, with the Nifty hitting a new high of 23,026.40 during the day before closing almost unchanged at 22,957.10.
Similarly, the S&P BSE Sensex ended the day marginally lower at 75,410.39. Sector-wise, the oil & gas and financial sectors performed well, while FMCG and realty stocks faced profit booking. Despite the day’s fluctuations, the broader market mirrored the flat performance of the benchmark indices.
Foreign portfolio investors (FPIs) have been net sellers in the Indian equity markets, offloading shares worth Rs 944.83 crore recently, contributing to a total sell-off of Rs 34,459.88 crore in May so far.
However, domestic institutional investors (DIIs) have been net buyers, with recent purchases amounting to Rs 2,320.32 crore.
Interestingly, despite the heavy selling by FPIs earlier in the month, there was a shift last week when they turned net buyers, purchasing stocks worth Rs 1,166 crore. Analysts attribute the initial sell-off to the outperformance of Chinese stocks and pre-election jitters in India. With the general elections approaching and expectations of a favorable outcome for the BJP/NDA, market sentiment is cautiously optimistic, and further FII buying is anticipated.
Technical analysts suggest a mixed outlook for the near term. Significant put writing at the 23,000 strike in Nifty indicates strong support at this level, while immediate resistance is expected around 23,100-23,200.
The Bank Nifty, on the other hand, has shown signs of bullish momentum, with significant support at 48,500 and potential to reach 49,500 if it breaches 49,050.
Sector and Stock Highlights
Adani Ports has been a focal point following its inclusion in the Sensex 30, replacing Wipro in the semi-annual review. This inclusion is expected to result in inflows of nearly Rs 2,100 crore into Adani Ports, while Wipro might see outflows of about Rs 1,400 crore.
Additionally, stocks such as Divis Labs, Adani Ports, and Hindalco were among the top gainers on the Nifty, while Adani Enterprises, Wipro, and Eicher Motors were among the major losers. Notably, Karnataka Bank’s shares fell sharply due to a significant drop in Q4 profits, while Bosch shares rose on the back of strong quarterly numbers.
Despite a record turnover of $82 billion in April, the GIFT Nifty derivative contracts saw a significant decline in May, with turnover falling to $44.24 billion. This drop is attributed to reduced trading activity by foreign investors, who are in a wait-and-watch mode due to election-related uncertainties.