Domestic markets are likely to see a flat opening, indicates the SGX Nifty. Amid positive Asian stocks, SGX NIfty is currently ruling at 17,580 (8 am IST), as against NIfty futures closing of 17,576 on Tuesday.
Holidays
Analysts expect the market to remain volatile with shallow trading ahead of holidays. The market is closed on Thursday and Friday. The series of holidays will keep the traders interest low, said marketmen
Live Equities across Asian stocks moved up around 0.5-.0.7 per cent in early deal on Wednesday. The US stocks, which began on positive on Tuesday, surrendered all its gains to close weak, amid concern over rising US treasury yields.
Weak IIP, Inflation nos
The rising inflation will put pressure on equities said analysts. In a shocker, headline CPI inflation came in at 17-month high of 7 per cent y-o-y in Mar'22, much higher than the market/our forecast of 6.4 per cent/6.5 per cent.
Separately, IIP growth stood at 1.7 per cent YoY in Feb'22, lower than our forecast and market consensus of about 3 per cent. Lower than expected growth was largely because of sharp decline in consumer non-durable sector, reflecting weak consumption growth in the economy.
Nish Bhatt, Founder & CEO, Millwood Kane International, an Investment consulting firm, said: A higher inflation print in the next month may force the central bank to act on key rates too.”
Consolidation phase?
However, analysts expect the equities to remain in consolidation phase in the near term, and fourth quarter results and outlook by India Inc will set the direction of market.
Ruchit Jain, Lead Research, 5paisa.com, said: In the near term, while the index could see some consolidation, sector rotation could be seen and hence, traders should look out for such sector/stocks which are showing relative outperformance. "We expect some buying interest to continue in sectors such as banking, cement etc."
Siddhartha Khemka, Head - Retail Research, Motilal Oswal Financial Services Ltd, said: "The earning season has kicked in and we expect overall good performance from the companies. Given government reforms and strong economic recovery, the long term trend of the equity market remains positive though there might be hiccups in between".
Fed stance spoils sentiment
Fear hit the street ahead of the earning seasons on concerns about the ongoing Russia-Ukraine stand-off and an aggressive and hawkish Fed commentary which is most likely to go for half-point rate hikes in May or June 2022, said Prashanth Tapse, Vice President (Research), Mehta Equities.
"The yield on the US 10-year Treasury rising to 2.78 per cent also created a panic in the market as most global markets traded lower. Nifty today broke support level and traded lower creating panic amongst traders. Technically, the make-or-break Nifty’s support seen at its 200 DMA at 17150 mark and intraday support at 17427 mark,” he added.