Global cues, foreign investments to guide markets from record high level
NEW DELHI: After a week of scaling new highs, India’s equity market in the coming week is likely to be dictated by foreign portfolio investment (FPI) inflows and global cues such as the US Fed meet minutes and developments related to Russian politics. These factors, coupled with positive macro numbers from India and the United States, and mergers of HDFC twins, led to a sharp rally in the last two trading sessions.
In the holiday-shortened week from June 26 to 30, the BSE Sensex rallied by 1,658.59 points or 2.63% to settle at a record closing high of 64,718.56 while the broader NSE Nifty50 climbed 511.60 points or 2.74%%, ending at an all-time closing high of 19,189.05.
For the coming week, Ajit Mishra, SVP - Technical Research, Religare Broking said, “Apart from favourable domestic cues, stability in the US markets has been playing an important role in maintaining buoyancy.” Mishra added, “We recommend maintaining the “buy on dips” approach as we are eyeing the 19,350-19,500 zone in Nifty.” The month of June witnessed heavy foreign fund inflow in the Indian market. The FPIs pumped in `47,148 crores in June, making it the highest monthly buying of the year.
“Sustained FPI flows triggered by India’s steadily improving macros have taken markets to record highs. The major reason for the sustained FPI flows into India is the reversal in FPI strategy,” said V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services.
“January and February 2023 saw massive flows to China triggered by China’s opening up after Covid and expectations of a revival in growth and earnings. This strategy proved to be a mistake since the prospects of China deteriorated and that of India improved. On the other hand, India’s macros are steadily improving, and GDP and corporate earnings growth have the potential to improve further from here. So FPIs have reversed their strategy to ‘Buy India, Sell China’,” said Vijayakumar. He, however, added that valuations in India are rich, from a short-term perspective.
Arvinder Singh Nanda, Senior VP of Master Capital Services, said that India’s manufacturing and services PMI data will be in focus. Globally, Euro, UK and US will also be sharing their Manufacturing and Services PMI numbers and US Initial Jobless claims, among others, will be the key events that will drive the market next week. Nanda added that the primary market is back in action after a period of lull, with a flurry of IPOs in the pipeline.