Indian stock markets are likely to see a sharp fall at the opening on Wednesday. The SGX Nifty indicates that Nifty is likely to see a 300-point fall as the US stocks crashed following more-than-expected inflation numbers.
Analysts, however, say the market may not witness a sharp fall from here. Though the sentiment turned sour following the global markets, experts believe, the market is expected to consolidate. "This could be a welcome relief, as the fall could provide entry point for some, who missed out on the recent rally," said a Chennai-based market veteran.
SGX Nifty is currently hovering around 17,870 against the Tuesday's close of 18,105.
US inflation data
Ritika Chhabra- Economist and Quant Analyst, Prabhudas Lilladher on US CPI, said: The US inflation in August rose higher at 8.3 per cent y-o-y against expectation of 8.1 per cent. The CPI index increased 0.1 per cent month-on-month while the economists were expecting it to decline by 0.1 per cent over the month due to sharp correction in energy prices.
"High costs of food, housing, transportation and other services reiterate the strong consumer demand and elevated service sector price pressures. With inflation being ‘stickier’ than expected, it is highly likely that the Fed will go for another jumbo rate hike of 75 bps in its next FOMC meeting on September 21," she added.
The Dow Jones Industrial Average sank more than 1,276 points or 3.9 per cent on Tuesday while the S&P 500 crashed 177.72 points or 4.3 per cent. The Nasdaq Composite witnessed even a bigger slide of 5.2 per cent or 632 points.
"The US Federal Reserve reiterated the need to act strongly against inflation, leading markets to expect more interest rate hikes in the near future," Mitul Shah - Head of Research at Reliance Securities, said.
US futures up
Equities across Asia-Pacific region are down between 0.7 per cent and 2.7 per cent in early deal on Wednesday. However, a fter a steep fall, all the three major US index futures are up by about 0.3 per cent in early deal on Wednesday. This signals, domestic market may see some support after initial jerk, analysts said.