Indian markets are likely to continue to be in a consolidation phase after opening in the red on May 8, as the Street worries about lower voter turnout, and confronts the possibility of a weaker NDA win.
At 9.25 am, BSE Sensex was down 100 points, or 0.1 percent at 73,407, while NSE Nifty 50 was down 24 points at 22,278.
“There is a bias of profit-taking in the market for the next few trading sessions. While the Street is expecting political continuity (with NDA retaining power), the low turnout is posing a risk,” Nirav Karkera, Head of Research at Fisdom, told Moneycontrol. He added that the market is worried about a hung Parliament.
On the other hand, investors may also be preempting a market correction even in case NDA retains a majority, since the results are likely already priced in, said independent market analyst Ambareesh Baliga.
“As we get closer to the election results, there is a sense that the markets could correct post-election results. People are trying to preempt the fall,” he said.
An NDA win with 320-330 seats is priced in. If the results are worse, then there could be an even sharper reaction, Baliga added.
The profit booking overhang may continue to drag markets today and for the next few days. "The day may see subdued activity with potential profit-taking. The upside seems to be limited in the near term,” Karkera said.
Analysts anticipate the broader market to stay within a tight range on May 8. BSE Midcap remained flat, while the BSE Smallcap index experienced a 0.3 percent decline, reflecting overall market pressure.
Addressing valuations, Karkare noted that Q4 FY24 earnings lack promise, contributing to steep valuations in the Indian market based on current prices.
Rajesh Bhosale, Technical Analyst at Angel One, forecasts immediate resistance levels at 22,400 and 22,480, with immediate support expected in the range of 22,200 to 22,150. In a note, he cautioned that a breach below the 22,200-22,150 levels could lead the Nifty 50 towards the 22,000 mark.
Global markets including the US and Asian counterparts, exhibited sluggishness today, lacking significant economic catalysts.
Global markets remained unfazed by remarks made on May 7 by Minneapolis Federal Reserve President Neel Kashkari. Kashkari suggested that the Fed might consider keeping rates unchanged for the rest of the year, citing stagnant inflation and robustness in the housing market.
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