Nifty may open 50 points lower, likely to surrender 18,000-mark once gain

K. S. Badri Narayanan | | Updated on: Jan 11, 2022
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Rising treasury yields, India Inc performance to anchor markets

Domestic markets are likely to open flat-to-negative on Tuesday, after a fabulous rally on Monday. Rising treasury yields are putting pressure on equities across the globe, as experts believe the US Fed will increase rate sooner-than-later.

SGX Nifty at 17,990 indicates that Nifty is likely to surrender the psychological 18,000-mark once again. Nifty closed above 18,000 for the first time in two months. Nifty futures on Monday closed at 18,054.95, signalling a 50-point gap down opening for Nifty.

Asian markets are mixed. While Japan stocks are down, equities across Korea, Taiwanand Australia eked out marginal gains.

Overnight, Nasdaq made a smart turnaround. After dipping almost 2.7 per cent, Nasdaq recovered to close flat at 14,942.83. However, the S&P 500 edged down 6.74 points or 0.1 percent at 4,670.29 and the Dow fell 162.79 points or 0.5 percent at 36,068.87.

Rising treasury yields

The US treasury yields soared on Monday. India’s benchmark yield jumped to the highest in two years on Monday in the backdrop of rising US Treasury yields, continuous supply of State Development Loans and Government Securities (G-Secs), and the inflationary impact of rising crude oil prices.

The yield on the 10-year benchmark G-Sec/GS (coupon rate: 6.10 per cent) surged about five basis points on Monday to close at 6.59 per cent.

Most analysts expect the global markets will direct the near-term trend for benchmarks. However, budget expectation and India Inc quarterly performance will drive individual stock performance, they added.

Undertone remains bullish

Siddhartha Khemka, Head - Retail Research, Motilal Oswal Financial Services, said, :Markets have gained momentum in past few days on the back of low impact of Omicron variant leading to less stringent restrictions/lockdown by various government authorities. This has raised hope of economic recovery, along with expectation of strong corporate earnings.”

“After two strong quarters of earnings growth, we expect Nifty to register another healthy quarter of 22 per cent y-o-y growth in Q3-FY22. The growth will be driven by four sectors — Metals, BFSI, O&G and IT,” he added.

According to Ruchit Jain, Lead Research,, “Although the trend continues to be positive, the index is trading around its short term hurdle as a certain combination of retracements of the recent correction points out resistance in the range of 18000-18100. Further, in the derivatives segment the 18000 call writers have built decent positions for current weekly expiry and this strike has the highest open interest build up so far.”

“Considering the above factors, one should not rule out a possible correction in the near term. However, we do not expect any significant price correction as the undertone in both Nifty as well as Bank Nifty remains bullish,” he added.

Published on January 11, 2022

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