Domestic markets are expected to remain under pressure, amid risk-off trade by foreign portfolio investors. Gift Nifty at 24,800 indicates a flat opening.
Japanese bond sell-off has elevated borrowing costs, contributing to global market uncertainty and dampening risk appetite, said analysts.
With the results season coming to end, the focus now shifts to macroeconomic activity and US trade talks.
According to SBI Capital Markets, industry credit growth remained a weak spot in FY25, expanding at just about 8 per cent y-o-y, weighed down by structural shifts in the economy. The outlook for FY26 appears equally subdued, with the NSO projecting a 26 per cent y-o-y contraction in private capex. In FY25, specialised project financiers disbursed more than twice the net amount lent by banks in infrastructure credit — highlighting their growing dominance. Also, about 70 per cent of incremental industry bank credit over the 12 months ending December 2024 was directed toward working capital rather than new investments. Further, FY25 saw record corporate bond issuances, and this momentum may persist in FY26, particularly as the spread between MCLR and bond yields has widened to multi-year highs.
Meanwhile, Asian stocks are flat and remain lacklustre.
Siddhartha Khemka, Head – Research, Wealth Management, Motilal Oswal Financial Services Ltd, said investors are closely tracking the ongoing India and US talks for a trade agreement, which is likely to happen in three stages. “As per reports, an interim agreement is expected before July when the pause in US reciprocal tariffs are set to end. On the earnings front, ONGC, Indigo, PFC, Mankind Pharma, NTPC Green, RVNL amongst others will be announcing results on Wednesday. We expect markets to remain range bound and track global cues including progress on US trade talks with India, China among others,” he added.
Vikram Kasat, Head – Advisory, PL Capital., said: “Despite a bright global backdrop and select stock-specific action, domestic benchmarks struggled under selling pressure, signalling near-term caution and consolidation.”
Derivative trading signals a bearish outlook for the market. With FPIs ramping up their short bets in the futures space and the index failing to reclaim higher ground, the broader bias continues to tilt toward the bearish camp, said Dhupesh Dhameja, Derivatives Research Analyst, Samco Securities.
Ajit Mishra – SVP, Research, Religare Broking Ltd., said: “we believe investors should not overreact to the recent dip and instead wait for clearer signals.” While the breach of the 24,800 mark in Nifty has dampened near-term momentum, the short-term trend remains positive as long as the index holds above the 24,400 level decisively. In the meantime, we advise traders to avoid aggressive long positions and focus on sectors or themes that are showing relative strength, he added.
Published on May 21, 2025