Indian Equities Set to Open Flat as Global Rally Pauses
The Indian equity markets are poised to open flat on Thursday, following a rally that has taken the benchmarks to a nearly seven-month high. The benchmark Nifty 50 index hit a high of 24,666.9 on Wednesday, prompting analysts to predict a period of consolidation for the markets.
In the pre-market session, the Gift Nifty futures were trading at 24,724.5 as of 8:20 am IST, indicating that the Nifty 50 will open near Wednesday’s close. The index had gained 1.6% in the previous session, led by gains in financial and IT stocks.
The rally in the Indian equity markets has been driven by a combination of factors, including progress on trade deals and gains in macroeconomic stability. The government’s efforts to boost economic growth and reduce the fiscal deficit have also contributed to the upward trend.
However, analysts believe that the recent rally may be nearing its end, at least in the short term. “The markets have had a good run, and it’s time for some consolidation,” said Vinod Nair, head of research at Geojit Financial Services. “We may see some profit-taking in the coming sessions, but the overall trend remains bullish.”
The Indian rupee has also seen a significant bounce in recent sessions, rising to a three-month high against the US dollar. This has helped to boost the sentiment in the equity markets, as a weaker rupee can make it more attractive for foreign investors to invest in the country.
Despite the positive sentiment, there are still some concerns that could impact the markets. The Reserve Bank of India (RBI) is expected to keep interest rates unchanged in its policy review later this month, but there are concerns that the central bank may take a more hawkish stance if inflation continues to rise.
Additionally, the government’s plan to cut the fiscal deficit has raised concerns about the impact on the economy. The government has set a target of reducing the fiscal deficit to 3.8% of GDP in the current fiscal year, which could lead to a reduction in government spending and a potential slowdown in economic growth.
In the global markets, sentiments were mixed as investors remained cautious following a recent rally. The US markets were closed on Wednesday for a holiday, but European markets saw some gains, led by a rise in technology stocks.
In Asia, the Japanese Nikkei 225 index rose 0.6% and the South Korean Kospi index gained 0.4%. The Chinese Shanghai Composite index, however, fell 0.4% as investors remained cautious ahead of a key trade deal meeting between the US and China.
The Indian markets are expected to trade in a narrow range in the coming sessions, with the Nifty 50 index likely to face resistance at the 25,000 level. The index has already gained 10% in the current calendar year, and some analysts believe that it may be due for a correction.
In conclusion, while the Indian equity markets are set to open flat on Thursday, the overall sentiment remains bullish. The recent rally has been driven by a combination of factors, including progress on trade deals and gains in macroeconomic stability. However, analysts believe that the markets may be due for some consolidation in the short term, which could lead to some volatility in the coming sessions.
