SGX Nifty signals gap up opening for markets; volatility to continue

KS Badri Narayanan Chennai | Updated on October 07, 2021

Elevated commodity prices remains an area of concern.

Volatility is likely to continue both at domestic and international markets on Thursday as well. After opening weak, the US markets closed in the green overnight due to some progress on the US debt-ceiling impasse lifted equities on Wall Street. The dollar advanced, and Treasuries were steady as traders awaited key American jobs data though commodity prices remained elevated.

Asian markets too opened on a positive note on Thursday.

Santosh Meena, Head of Research, Swastika Investmart Ltd, said: Inflation is the biggest risk for the global markets, leading to a first meaningful correction in the global equity markets.

The focus will be on the rupee, which is tantalisingly close to 75 against the green back. “The Indian rupee has been trading weak throughout this week. It fell to an over 5-month low on concerns of rising crude prices and its likely impact on inflation. Crude oil prices rose to a 7-year high post-OPEC meeting earlier this week that decided to not increase oil output. The weakness in most Asian currencies also played its role in rupee depreciation," said Nish Bhatt, Founder & CEO, Millwood Kane International.

Analysts expect the market to consolidate around current levels.

SGX Nifty futures is currently 17,770, signalling a 140-point gap up opening, against Nifty futures closing of 17,627. Asian markets are up between 0.9 per cent and 2 per cent in early hours of Thursday. Dow, S&P-500 and Nasdaq closed 0.4 per cent higher, after opening about one per cent lower.

Siddhartha Khemka, Head - Retail Research, Motilal Oswal Financial Services Ltd, said, domestic markets are expected to consolidate in a broad range following multiple global concerns and elevated valuations. It is likely to witness high volatility till some decision is reached over US debt ceiling over next two weeks.

"Even RBI’s MPC and TCS results, both due on Friday would add to the volatility. RBI commenced its three-day MPC meeting today in which the central bank is expected to keep rates unchanged, however, it might announce measures to gradually pump out liquidity from the economy," he added

According to Santosh Meena, though the overall trend of our market is strongly bullish, any meaningful correction will provide buying opportunities, but traders should not hurry to buy the dip immediately. It will be important to listen to the RBI governor's commentary on upcoming policy amid worries of inflation.

Published on October 07, 2021

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