SGX indicates flat opening for Sensex, Nifty

Local markets are likely to open positively on Friday. The SGX Nifty Index at 18,855 points to a flat open about 50 points higher as Nifty futures closed Thursday at 18,830 on the NSE exchange. Analysts expect thin trading as the valuation appears stretched. Unless some catalyst appears for the bulls, the market may move within the range as they said. Strong support from foreign portfolio investors will keep the downside of the market in check.

The focus will be on central bankers in the wake of the Bank of England’s sharp 50bps rate hike and the 650bps surge in Turkey. Madhavi Arora,chief – economist, Hmkay Global Financial Services Ltd, said the May Monetary Policy Committee meeting provided some consistency of views after the abrupt halt at last April’s meeting.

Focus on policy actions

The general tone was “wait and see”, with members talking about the need to assess the delayed impact of policy actions thus far. The uncertainty surrounding the monsoon has garnered attention, with simultaneous upside risks to inflation noted over and over again, albeit with variation as to how these risks are assessed. She said there is also focus on this being a temporary pause for the current meeting only, without providing future guidance, although there will be an eye on the evolution of monetary policy in DM economies.

Optimism on growth was largely unanimous, but risks from a possible lack of monsoon were mentioned again. “Going forward, policy measures are likely to remain vigilant and data-driven, but the RBI is unlikely to cut interest rates ahead of the Fed in an unstable and volatile global environment,” she added.

Asian stocks open weak

US stocks rebounded sharply overnight after a weak opening. While the Nasdaq and the Standard & Poor’s 500 closed in the green zone with gains of about 1 percent and 0.4 percent, respectively, the Dow Jones index closed in the red zone, but without change. However, stocks across the Asia-Pacific region fell in early trade on Friday.

Powerful macros

Analysts also see little upside in the markets, given the rigorous valuation. They added that fundamental economic indicators remain strong.

Emkay Wealth Management said: Monsoon concerns due to the impact of El Nino cannot be ignored. But the good part is private capex is starting to look up and it’s positive for the economy. Although Indian markets continue to be an area of ​​fair value compared to global valuations, FII is buying into Indian markets as it stands out strongly among developing economies. Domestic investors also continue to pour money into Indian stocks. Strong growth in India could support higher valuations in the medium term. Corporate commentary/tax groups and consumer data point to healthy growth in FY24.

According to her, select small and medium-sized caps can outperform while closing the evaluation gap with larger peers. Emkay Wealth prefers structural growth companies to cyclical companies because the peak of the commodity cycle is behind us.

Medium Caps in an overbought position

According to Ruchit Jain, Lead Research, 5paisa.comAnd The Momentum readings on the mid-head indicator are significantly overbought and need to calm down, which can be noticed by either some consolidation (time correction) or some price correction. Hence, traders should be selective in picking stocks and look for opportunities to buy on dips when the overbought group subsides.