Asian markets start the week on a high note, here’s what could be ahead for domestic stock markets

The special muhurat trading session on Saturday took Sensex and Nifty to their new all-time highs. S&P BSE Sensex now sits at 43,637 points while the 50-stock NSE Nifty is at 12,780 levels. Now with the festive season behind us and no major domestic triggers ahead, some analysts are expecting minor corrections while some see markets replicating the trend from last week. Technically, Manish Hathiramani, proprietary index trader and technical analyst, Deen Dayal Investments said that with Nifty crossing 12780, the index could scale up to 13000 levels.

Global watch

Even though domestic markets were closed, global markets were trading on Monday and the mood among Asian peers was buoyant. Shanghai Composite ended over 1% higher and Nikkei 225 closed with 2% gains. Japanese stock markets were at a 29-year high. Kospi and KOSDAQ were upbeat as well.Ajit Mishra, VP – Research, Religare Broking believes that global cues will again be in focus with no major domestic triggers left and corporate earnings season now almost over. 

Inflation at a high

Domestic macroeconomic data shows inflation is still high. The WPI continued to rise in October and hit its highest since March 2020. Wholesale prices in India rose 1.48% in the month of October, after having risen 1.32% in the previous month. The WPI Food Index fell from 6.92% in September to 5.78% in October, while WPI manufacturing rose at 2.12%, against 1.61% in September. Retail Inflation jumped 7.61% in October. Higher inflation, analysts say, pushes away any possibility of rate cut by the RBI’s MPC. 

“Our domestic economy is currently witnessing inflationary tendencies with October retail inflation at 77-month highs and hence investors are advised to accumulate real estate and metal stocks which can outperform in the current inflationary circumstances,” said Nirali Shah, Senior Research analyst, Samco Securities. She adds that investors should wait for a correction in the Nifty before making other trades. 

Technical outlook

“Last week, we had witnessed a ‘Bullish Flag’ breakout around 12050 and since then markets never looked back. With its marathon rally in merely eight days, markets are very much in a commanding position. All’s well that ends well and hence, from hereon we can see a brighter picture till the next SAMVAT,” said Sameet Chavan, Chief Analyst-Technical and Derivatives, Angel Broking. He adds that the next milestone of 13000 could be achieved very soon. “In fact, we do not rule out the possibility of reaching 13100 – 13200 in the forthcoming week itself,” he said.

The Nifty 50 index is forming a symmetrical triangle on the intraday chart, said Shrikant Chouhan, Executive Vice President, Equity Technical Research at Kotak Securities. “ It’s a bullish continuation formation that would lift the market towards the psychological mark of 13000. The breadth of the broader market is quite satisfactory, which is indicating a firm grip of bulls and would not allow the Nifty to fall below 12600 levels in the normal circumstances,” he added.