Domestic markets are expected to open on a flat-to-negative note despite a 40-year-high inflation rate in the US.

According to analysts, though the US inflation number at 9.1 per cent was unexpected, markets will take it in their stride and move forward, as commodity and crude oil prices have already cooled down drastically.

SGX Nifty at 15,940 (8 am) indicates that the market may open 0.25-0.3 per cent lower, as Nifty futures closed at 15,990 on Wednesday.

However, the falling rupee is a key concern for Indian stocks, said analysts, who fear the unit may breach the 80-mark against the dollar very soon. A falling rupee forces foreign portfolio investors to sell their positions in India, they added.

‘Fed to move on expected lines’

The US Federal Reserve will travel on a path that marketmen have already discounted, experts said.

US stocks, which plunged on the inflation news, recovered sharply to end only marginally lower. Most equities across the Asia-Pacific region were trading flat or in the green in early deals on Thursday, except Korea and Taiwan, which were down.

Eyes on earnings

The focus will now be on India Inc.’s earnings. Chairman & Co-Founder of Motilal Oswal Financial Services, Raamdeo Agrawal, aid in a tweet: “Domestics are not letting the markets go down drastically. FIIs are not letting it go up phenomenally. It’s a tug-of-war between the FIIs and Domestics. The earnings growth numbers will decide the direction of the market. I am optimistic about earnings growth.”

According to V.K. Vijayakumar, Chief Investment Strategist, Geojit Financial Services, an important short- term trend playing out in the market is the weakness in IT and strength in banking. "IT is weak on margin pressure in the industry and fears of the fallout of a possible US recession. Banking is strong due to its strong fundamentals and the impressive credit growth underway in the economy," he added.