The domestic market is likely to begin the new week on a positive note. Gift Nifty 24,150 signals a positive opening of about 60 points for the Nifty.

Vikram Kasat, Head – Advisory, PL Capital – Prabhudas Lilladher, said: market volatility remains a concern, and sustained momentum has yet to materialise. “Investors are keenly awaiting the upcoming budget, which is expected to influence market trends in the weeks ahead,” he added.

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According to IFA Global, FX & Treasury Management, “We continue to be selectively optimistic on domestic Equities. There are pockets in large caps where the valuations are attractive. On the other hand Midcaps and Smallcaps still seem overvalued. Banks and energy are sectors we particularly like. We prefer to express our bullish view in the blue chip space and prefer to avoid the mid and smallcap space at this point.

Meanwhile, most equities across the Asia Pacific region are up, except in Japan.

Despite FPI selling, analysts expect the market to remain volatile with a positive bias. According to them, volume is likely to remain low.

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Dr V K Vijayakumar, Chief Investment Strategist, Geojit Financial Services, said,“The general perception that the market has turned weak due to sustained FII selling during the last three months is largely true. However, what is not generally appreciated is that even while selling in the cash market through exchanges, FIIs have been buyers through the primary market. They have been big investors through the QIP route.”

He said that for CY 24, this trend is very distinct, adding that. For CY 24, FIIs sold equity heavily for Rs 1,21,210 crore. But they bought equity for Rs 1,21,637 crores through the primary market. Therefore, FIIs have net bought for Rs 427 crore in 2024. The message is clear: FII selling is due to high valuations in the secondary market. In the primary market, where the valuations are fair, FIIs have been sustained investors.”

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FIIs will likely continue to sell going forward as long as the dollar rallies and the U.S. bonds yield attractive returns. The dollar index at around 109 and the 10-year bond yield above 4.5 per cent are strong headwinds for FII flows.“