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Benchmarks BSE Sensex and NSE Nifty50 are likely to open on flat note though mid- and small-cap stocks may continue to be under pressure. After Tuesday’s heavy fall in some of the mid- and small-cap socks, analysts expect volatility in that space. Gift Nifty is ruling at 20,070, signalling a flat opening for Nifty50.
“Overall, we expect the focus to shift from mid- and small-caps to large caps in the near-term, as investors may turn cautious on the broader market,” said Siddhartha Khemka, Head - Retail Research, Motilal Oswal Financial Services Ltd.
Analysts do not expect any sharp recovery in mid- and small-cap stocks and advised investors to remain cautious.
However, favourable inflation numbers and relatively better index for industrial production (IIP) data to keep even the broader market in a range, they added.
According to Madhavi Arora, Economist at Emkay Global Financial, the material easing seen in August CPI to 6.83 per cent, led by a sharp reversal in perishable food prices, is likely to continue in September, leading to a less than 6 per cent print.
While non-perishables are showing signs of persistence, overall food inflation is likely to reverse meaningfully in H2 FY24. The stickiness in core inflation will be sustained before easing by Q4 FY24, and core will undershoot headline inflation by 30-40 bps in FY24, Arora added.
“We see FY24 inflation at 5.2 per cent (RBI: 5.4 per cent), with the RBI to keep rates on hold ahead, and not precede the Fed in any policy reversal in CY24,” she said.
IIP growth accelerated to a 5-month high of 5.7 per cent in July from a three-month low of 3.8 per cent in June.
“This is better than our projection of 5.3 per cent,” said CARE Edge. Healthy growth in mining and electricity continued; manufacturing output improved; infrastructure goods output rose 11.4 per cent, logging double-digit growth for the 4th straight month; and consumer non-durables rebounded with 7.4 per cent growth in July vs 0.3 per cent growth in the prior month.
Going ahead, healthy momentum in the infrastructure and construction segment is likely to continue and consumption could get a boost from the upcoming festive season, it added.
Meanwhile, equities across Asia-Pacific region are down marginally, tracking overnight US stocks. Investors await key US inflation data to be announced on Wednesday for clues on the Federal Reserve’s policy outlook
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