Even as global cues remain positive, Indian stock markets on Tuesday are likely to move in a range with volatility, ahead of F&O expiry on Thursday. Indian markets are expected to open on a strong note, but the question is will it sustain in the later half, said analysts, The Hindu BusinessLine reports.
However, given the strong surge in the global markets, especially in the mid and small-cap space, the recent underperformance by Indian markets is likely to end soon, they added.
Analysts also welcomed the Government’s National Monetization Pipeline programme, as it will attract global sovereign funds.
Clues from SGX Nifty indicates that Nifty is likely to witness a gap-up opening well above 16,600. The SGX Nifty is currently hovering around 16,636 much higher than the Nifty future’s Monday close of 16,494.25 (August) and 16,528.40 (September).
“After a week of sharp sell-off, global markets turned positive this week post the news that China reported no new Covid-19 cases for the first time since July. However, sentiments remained brittle as the US Fed is considering starting withdrawal of its extraordinary monetary stimulus and European manufacturing surveys pointed to a slowing global economic recovery in the face of the new Covid outbreak,” said Siddhartha Khemka, Head - Retail Research, Motilal Oswal Financial Services.
Analysts said, this being the settlement week for August series on the NSE, markets are likely to see volatility and advise caution on individual stocks.
“Heavy selling continued in small and mid-cap stocks, while headline indices traded positive due to strong support from IT stock and positive global peers. The key factor for the correction is the good performance during 2020-21 leading to peak valuations while liquidity is expected to normalise in the future. The ongoing correction will provide an opportunity for long-term investors to re-enter quality stocks,” said Vinod Nair, Head of Research at Geojit Financial Services.
The US stocks closed at all-time high overnight. The Dow Jones Industrial Average gained 216 points, or 0.6 per cent. The S&P 500 added 0.85 per cent or 38 points and the Nasdaq Composite soared 1.55 per cent or 228 points.
Tracking the US markets, markets across Asia-Pacific region such as Japan, Korea and China jumped over one per cent. Taiwan and Australian markets are up by 0.4 per cent in early deals on Tuesday.
The Finance Minister Nirmala Sitharaman on unveiled the National Monetization Pipeline worth ₹6 lakh crore. Under the NMP, the government aims to monetise under-utilised public sector assets through the participation of the private sector and unlock the value of “government investments and public money” in infrastructure. The plan comprises a four-year pipeline of the government’s brownfield infrastructure assets from the financial year 2022-2025.
Srishti Ahuja, Partner, Strategy & Transactions, EY India, said: The National Monetization Pipeline is being closely tracked by global sovereign wealth funds, pension funds and infrastructure funds. As the underlying assets are operating, provide visibility of a regular cashflow stream and do not have development and construction risk, the assets are well suited for yield investors”.
According to her, as some assets will have a revenue growth trajectory (eg: toll roads and airports) and some assets will have a fixed revenue profile (eg: transmission assets), the various pools of assets will have the ability to attract a diverse set of global investors.
“The success of the program, however, will also be dependent on the contractual framework. If the concessions are long term (at least 15 years) and if the risk allocation framework assigns risks in proportion to the underlying asset returns, the interest will be higher vis-à-vis a scenario where the two are mis-aligned, as an instance, where the investors bear the risk of capex approvals/capacity augmentation but their returns are capped,” she added.