Domestic stock markets are expected consolidate further on Wednesday despite weak global cues. According to analysts, benign inflation numbers and strong IIP numbers will help market open in positive territory.

However, analysts are surprised that the market remained at elevated levels despite institutions, both domestic and FPIs, being on sell mode and rupee turning weak. Besides, market is also ignoring commodity prices, which poses inflation threat.

SGX Nifty at 18,050 indicates a 50-point gap up opening for Nifty futures, which on Tuesday closed at 18,002 on the NSE. Except Korean markets, equities across in Asia-Pacific region are down, albeit only marginally, on Wednesday. Overnight, the US stocks too slipped by around 0.2 per cent.

There is positive development on both fronts, as inflation cools down and growth picks up, said Nish Bhatt, Founder & CEO, Millwood Kane International. The CPI inflation data for September has eased to 4.35 per cent. It is steadily falling down from the highs witnessed since the start of this financial year.

The IIP has grown above the 11 per cent mark for two consecutive months.

“IIP has grown due to unlocking measures and festive-demand buying. As we move forward, industrial output and economic growth are expected to improve with further normalisation of business activities,” said DRE Reddy, CEO & Managing Partner, CRCL LLP.

Rupee falls

The Indian rupee fell to a 15-month low on Tuesday, sliding past important support levels. The currency extended a bout of weakness to fall to a low of 75.65 against the US dollar in afternoon trade.

“Negative triggers such as higher oil prices, rising US bond yields and consequently a stronger dollar pushed the Indian currency lower,” said Deepak Jasani, Head of Retail Research, HDFC Securities. A sell-off in global stocks continued on signs that soaring energy prices have put a dampener on economic growth, while inflation and policy-tightening fears sent short-dated US Treasury yields to 18-month highs, he said.

“The upward momentum could continue for Nifty with some intermittent profit taking. Subdued sentiments in the global markets could however slow this momentum,” he further said.

Mohit Nigam, Head - PMS, Hem Securities, said going ahead, bull momentum doesn’t appear to be fizzling out. However, one needs to stay cautious following global trends, he added.

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