Indian benchmark indices, Sensex and Nifty, are expected to open on a positive note on Monday even as all eyes are on the swearing-in ceremony of Donald Trump as US President. ‘Since US bond yields are attractive, FIIs have been sellers in the debt market, too. A reversal of the FII flows will happen only after the market signals the peaking of the dollar and US bond yields, followed by their decline. This, in turn, will depend on President Trump’s tariff policies which presently are not yet clear,‘ said VK Vijayakumar, Chief Investment Strategist, Geojit Financial Services.
Gift Nifty 23,300 indicates a flat to positive opening for Nifty.
Domestic equities are expected to remain volatile with stock-specific action as the third quarter of the corporate earnings season is in full swing. Investors will closely track the December quarterly results and management commentary. Donald Trump’s swearing-in as the 47th president of the United States on Monday, 20th January, and the following policy announcements will have a strong impact on global market sentiments, said Siddhartha Khemka, Head—Research, Wealth Management, Motilal Oswal Financial Services Ltd.
The behaviour of foreign portfolio investors would be keenly watched. They have been heavy sellers until now.
Vipul Bhowar, Senior Director – Listed Investment Waterfield Advisors, said: as of January 2025, foreign portfolio investors (FPIs) have resumed being net sellers, withdrawing funds due to concerns about corporate earnings and the overall economic outlook.
“Key challenges for the recovery of FPIs include fears of a prolonged global recession, geopolitical tensions that may negatively impact investor sentiment, and a stronger US dollar along with rising bond yields, which could prompt investors to prefer safer US assets over Indian markets,” he added.
Meanwhile, Japan and Korean markets are up in early trade on Monday.
A cyclical improvement in corporate earnings, along with stronger GDP growth driven by resilient domestic consumption and increased government spending on infrastructure projects, could lead to a potential turnaround in foreign portfolio investment (FPI) flows into India. Additionally, the Reserve Bank of India’s potential interest rate cuts may create a more favourable borrowing environment and make US bonds less attractive, further encouraging FPI inflows, he further said.
Vinod Nair, Head of Research, Geojit Financial Services, said: Overall, the market is expected to remain cautious in the short term due to moderate Q3 expectations, while persistent FII outflows could add to higher volatility. Looking ahead, the incoming US president’s policies and comments will be keenly watched with a focus on tariffs. Higher inflation in Japan or tighter policy from BoJ will weigh on market sentiments.“
Osho Krishan, Senior Analyst – Technical & Derivatives, Angel One Ltd, said: The market conditions continue to display signs of extreme overselling, characterised by a significant lack of buying interest and ongoing downward pressure on prices. Despite this, no discernible sign of a rebound or recovery has created a challenging landscape for traders and investors alike. Given the current climate of uncertainty, it would be prudent to maintain a light stance on positions and concentrate on specific thematic stocks that may demonstrate resilience or growth potential.
Source: www.thehindubusinessline.com
