Sensex, Nifty eyes gap-up opening as economic data meets expectations; analysts warn of sell-on-rally
The fresh week and the beginning of a new month seem to be positive for domestic markets amidst mixed global cues. A set of economic numbers, such as GDP, GST collection, and auto sales, were largely on expected lines, said analysts. However, the unabated selling by foreign portfolio investors will keep the market under pressure, they added. According to most of them, it could be a sell-on rally.
The December quarter GDP number was 6.2 per cent, and GST collections were healthy at Rs 1.84 lakh crore.
Gift Nifty at 22,370 against Friday’s close of 22,280 signals a gap-up opening of about 100 points.
Rajani Sinha, Chief Economist, CareEdge Ratings, said: “We expect the growth momentum to rebound further in the coming quarters. Factors such as recovering rural demand, lower tax burden, policy rate cuts, falling food inflation, and recovery in public capital expenditure should support improvement in economic activity going ahead. Festivities amidst Maha-Kumbh celebrations in Q4 should also support consumption demand and trade, hotel and transport sectors. A sustained recovery in consumption will be critical to drive a meaningful uptick in corporate capex.
“However, rising global policy uncertainty, especially on the trade front, geopolitical tensions, and weather events, remains a key monitorable. Overall, we expect GDP growth of around 7% in Q4 FY25 and 6.7% for FY26,” she said.
The unabated selling by foreign portfolio investors is a cause for worry, according to analysts, and unless they stop their aggressive selling stance, the recovery will be rather shallow, they warned.
Vipul Bhowar, Senior Director – Listed Investments, Waterfield Advisors. Said: “Elevated valuations of Indian equities, alongside concerns about corporate earnings growth, have led to a sustained outflow of foreign portfolio investments (FPIs). The earnings reports for the third quarter of fiscal year 2025 have been modest, indicating an atmosphere of uncertainty. Revisions to forward earnings have struggled, with downgrades outpacing upgrades, particularly among companies outside the Nifty 50 index.
This issue is further compounded by falling commodity prices and reduced consumer spending, which adversely impact corporate profits and diminish the appeal of Indian equities to foreign investors. The recent market sell-off has been influenced by rising US bond yields, a strengthening US dollar, and global economic uncertainties, leading to a shift in investor focus towards US assets, he added.
“Consequently, FPIs in Indian equities have reached multi-year lows due to significant selling, and investors are likely to await signs of recovery before re-entering the market. Until then, volatility in Indian markets is expected to continue due to ongoing global and domestic challenges.,” he added.
Technically bearish
Despite deep corrections in the last few months, especially in the mid- and small-caps, analysts said the market is weak technically and there is no sight of recovery. ‘There could be a technical bounce back, which would be used to sell further, ’they warned.
According to Choice Broking, Nifty 50 has corrected 15.87% from its all-time high, marking a five-month losing streak, the longest since 2000. Weak sentiment persists due to slowing growth, declining earnings, and foreign outflows. Global uncertainties, including Trump’s tariff announcements, have further dampened risk appetite.
Options data further highlights significant resistance at 22,500 and 22,800, with the highest Call Open Interest concentration. A breakout above 23,000 could trigger short covering and fresh buying, leading to a potential recovery. Nifty’s movement will largely depend on global cues, trade developments, and the GDP data outcome for the coming week. Until a decisive breakout occurs, traders are likely to maintain a cautious approach, favouring a sell-on-rise strategy while closely watching key support levels.
