Domestic Markets Anticipated to Open Flat as Focus Shifts to Corporate Earnings

Domestic markets are poised to begin on a flat note as investors react to a mix of global market signals. With a significant amount of selling pressure from foreign portfolio investors, the attention has now turned towards upcoming corporate earnings reports.

Market Trends and Economic Indicators

The direction of the market is expected to be influenced by key domestic and international economic indicators, including the India Nikkei S&P Global Manufacturing PMI, India Nikkei Services PMI, and insights from the Reserve Bank of India's MPC meeting minutes. Additionally, data from the United States, such as initial jobless claims and various PMI reports, will also play a crucial role in shaping market sentiment.

This marks the continuation of a downward trend for stock indices, with the Nifty50 seeing its lowest level since August as it closed down 0.50 percent at 24,854. Similarly, the Sensex experienced a slight decline of 0.20 percent, ending the week at 81,224.75. The recent market weakness can primarily be attributed to disappointing quarterly earnings from major companies and unsatisfactory domestic inflation figures, which have led to a consensus that a rate cut by the RBI may be delayed.

Foreign Selling and Market Sentiment

Foreign portfolio investors have been particularly active in selling, pulling out a staggering ₹77,701 crore (approximately $9.25 billion) from Indian equities up to October 18, marking a 13-session streak of net selling.

Nifty futures closed at 24,949.15, and early trading showed the GIFT Nifty at 24,925. Even after a rebound on Friday, the mood in the options market remains cautious. There are signs of call writing dominating over put writing, indicating a bearish outlook. Significant open interest has been noted around the 25,000 strike calls and 24,000 puts, hinting at traders' cautious sentiment regarding further upward movement.

Asian Markets and Technical Analysis

In the broader Asia-Pacific region, stock markets displayed mixed results. While markets in Japan and South Korea saw slight gains, those in Hong Kong and Singapore recorded small losses. The Chinese markets remained mostly stable despite a recent interest rate cut.

Experts suggest that the next notable trend in the market will depend on price action within specific levels. A break below 24,600 could confirm a “Head and Shoulders” pattern, indicative of further weakness, while a rise above 25,250 may signal a minor double-bottom formation, which could inspire optimism in anticipation of the festive season.

Traders are advised to adopt a wait-and-see approach for clear breakout signs before making significant trades in either direction. It is also crucial to focus on company-specific opportunities while exercising caution, as many individual stocks have recently experienced sharp declines despite the broader market's recovery.

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