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Informist, Thursday, Nov. 14, 2024

By Anjali Singh

MUMBAI – Domestic benchmark indices are likely to extend losses next week as market sentiment remains weak, analysts said. A sharp rise in US Treasury yields, weak domestic fundamentals, earnings downgrades, and persistent selling by foreign investors are some factors that are keeping investors cautious. However, as the quarterly earnings season ends, investors will look at global and other domestic cues going forward. 

The domestic market will look at the international bond market for cues now, said Vinit Bolinjkar, head of research at Ventura Securities. The 10-year US Treasury yield rose to 'uncomfortable levels' this week, leading to concerns for emerging markets like India, analysts said. The weak corporate earnings continue to weigh on sentiment at a time when there is a rise in safe–haven assets such as the dollar index and US treasury yields, said Deepak Jasani, head of retail research at HDFC Securities, in a note. A rise in such safe-haven assets makes emerging markets' equities less attractive. The sharp rise comes despite rate cuts by the US Federal Reserve and the US inflation print being in line with expectations, said Ambrish Agarwal, director at Eastern Financiers.

"Next week, we can witness some bounce back on the higher side, but it will likely be sold off," a technical analyst at a domestic brokerage said. If the Nifty 50 falls below 23200 points, then it can further correct to 22800 points, the analyst added. The Nifty 50 closed at 23532.70 points, down 26.35 points or 0.1%. The Sensex closed at 77580.31 points, down 110.64 points or 0.1%. The support for the Nifty 50 is still seen at 23500 points and the next support is seen at 23300 points. The resistance for the 50-stock index is seen at 24000 points.

Shares of fast-moving consumer goods companies were among the worst performers in the Nifty 50 index. These stocks are likely to extend losses in the upcoming week. "Valuations are still getting towards comfortable zones, and we may see these stocks fall for a week or two before a bounce back," said Akriti Mehrotra, research analyst at StoxBox. With urban demand weakening, disappointing quarterly earnings, and increased raw material prices, more downside in the sector is expected, analysts said.

After some central banks decided to ease their monetary policies and trim key rates, there were expectations of a rate cut by the Reserve Bank of India in December. However, these expectations have been pushed back now. Some analysts expect a rate cut in February, while some await more data. "It will be difficult to comment on when the RBI may cut rates. It will depend on the economic situation and data," Bolinjkar said.  End

Edited by Akul Nishant Akhoury 

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