Mixed Asian markets as India VIX drops indicating lower volatility

Domestic markets are expected to open flat on Tuesday amid mixed global cues. The continuity of major portfolios with the same trusted face, especially Nirmala Sitaraman as Finance Minister, bodes well for the market, said analysts. Gift Nifty at 23,275, against Nifty futures close of 23.247.15, signals that the India market may eke out marginal gains at the open.

Ruchit Jain, Lead Research, 5paisa.com, said: “Our markets have seen a sharp V-shaped recovery from last week’s low and the index posted new record by surpassing last Monday’s high.” However, some profit booking was seen at higher levels as the index has rallied sharply in the last few days, and the momentum readings on the lower time frame charts reached the overbought zone. Thus, although the broader trend remains positive, some consolidation or pullback move cannot be ruled out to cool off the overbought setups, he said. “But any such corrections will be seen as a part of the uptrend as the daily and weekly readings are positive and hence, traders should use dips/consolidations to use as a buying opportunity,” he added.

Post portfolio allocation, the focus now shifts to policy initiatives of various government departments said analysts. With the portfolio allocation over, experts believe that the economy will grow in a stable trajectory. However, some fear that the government may also indulge in populist measure.

According to Tanvee Gupta Jain, Chief Economist, UBS India, said:  “India’s general election outcome has ensured political stability, which should help maintain policy continuity. However, we see risks of a populist bias in the third term, particularly aimed at the lower-income strata, potentially delaying tougher economic reforms. The apparent dichotomy between resilient GDP growth and below-trend household consumption post-pandemic highlights the need for a broad-based capex recovery. While our FY25 real GDP growth forecast remains at 7% YoY, we expect headline CPI inflation to ease below 4% by September 2024. Despite India’s strong macroeconomic position, we do not anticipate any rate cuts in CY24. The government is likely to stick to its fiscal consolidation path, aiming to reduce the fiscal deficit to below 4.5% of GDP by FY26.”

Meanwhile, Asian stocks are mixed.

The India VIX, which measures market volatility, decreased by 2.71 per cent intraday, settling at 16.425, indicating reduced market fear, said Mandar Bhojane, Research Analyst at Choice Broking. Regarding the Open Interest (OI) data, on the call side, the highest OI was observed at the 23,500 and 24,000 strike prices. On the put side, the highest OI was at the 23,000 strike price, he added.



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