Market sentiment remains cautious amid West Asia crisis

New Delhi, Oct 29

In the short-term, market sentiment remains cautious with investors closely monitoring developments in West Asia, upcoming corporate earnings, and key economic data, including domestic PMI figures to be announced, says Vinod Nair, Head of Research at Geojit Financial Services.

Ongoing unrest in West Asia and concerns over the potential impacts of higher interest rates on future economic growth have resulted in a decline in investor confidence, he said.

FIIs selling is affecting the domestic market invariably to heavy buying by DIIs. Domestic indices have displayed some recovery in the last trading day of the week, due to favourable US Q3 GDP growth and moderating US inflation leading to moderation in bond yield.

Decent Q2 results in India, which were in line with optimistic estimates, may also support the market's rebound. However, the volatility of the global market is expected to delay the recovery trend of the domestic market, since the global market is focused on the risk of further slowdown of the global economy due to elevated interest rate and geo-political tension, he said.

Amid the ongoing market consolidation, sectors such as FMCG, consumption, fertilizers, and core segments like infrastructure, housing, are expected to present potential growth opportunities. Contributing factors include the mitigation of risks associated with raw material costs and a stable long-term demand outlook from external sectors, which may specifically support sectors like Chemical and Pharma in the medium-term, he added.

Siddhartha Khemka, Head - Retail Research, Motilal Oswal Financial Services said while US Fed’s rate decision on Wednesday will be a key event, investors would also await BOJ’s meeting outcome on Monday amid high global bond yield. We expect the market to continue with its volatile move going forward ahead of key economic events and ongoing earning season.