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The domestic equity market is likely to open in a narrow range on Friday with a downward bias. SGX Nifty at 18220 indicates a flat-to-negative opening, as Nifty futures on Thursday closed at 18,294.65.
Analysts expect the stock market to remain in consolidation phase on the back of buying by foreign portfolio investors .
However, global stocks, especially the US markets, are under deep pressure as almost every day one bank is collapsing. “It doesn’t seem like it was a long time ago that we had a full-blown global banking crisis that set Wall Street back for many years.
Today, US stocks are falling as bank turmoil is leading to the rapid collapse of PacWest and Western Alliance. Sticky inflation and a slowly cooling labor market will make it difficult for the Fed to cut rates anytime soon, said Edward Moya, Senior Analyst, The Americas, OANDA.
Also read: Book profits in Indian equities as US recession imminent: BofA Securities
“Financial stability concerns are not going away anytime soon and that will continue to fuel calls that we are headed towards a recession that will be much more hard hitting than the mild one some are expecting,” he added.
The US benchmark indices fell in the region of 0.5 per cent and 0.9 per cent.
Analysts expect the Indian markets too may come under pressure soon. However, strong buying by FPIs will keep the market in the range, they added.
Vinod Nair, Head of Research at Geojit Financial Services, said, “Following a widely expected rate hike by the Fed and consistent foreign support, the domestic equities resumed its bullish momentum, driven by gains across major sectors. However, the US market faced losses as the Fed reiterated concerns over elevated inflation despite softening its language on future rate hikes. Signs of returning contagion fears in regional US banks also weighed on the global market mood.”
The Emkay Global Research, which hosted a roundtable with a conference led by Madhabi Arora, said it believes India will likely witness a sub-5 per cent inflation early this year, with an average rate of CPI at 5.2 per cent for CY23. The RBI action, normal monsoon year, supply-side constraints getting addressed will help with ease in inflation.
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