The benchmark stock market indices tumbled in noon-day trade. The Sensex was down 687.87 points or 1.17 percent at 58238.16. The broader Nifty was down 208.60 points or 1.18 percent at 17,397.20. About 882 shares have advanced, 2169 shares declined, and 90 shares are unchanged.
Naveen Kulkarni, Chief Investment Officer, Axis Securities, said, US inflation has hit a multi decade high of 7.5 percent, which has implications on the pace of interest rate increase by the US Fed. This will lead to higher volatility in all financial markets, including equity, debt, and currency. We expect emerging market currencies to be under pressure, including the rupee. We also expect Indian interest rates to increase despite dovish RBI yesterday. This will have implications for equity investors. We expect this increased volatility to hit small / midcaps more than large caps. We believe that the expected increase in volatility should be used by investors to build positions in quality large-cap and midcap stocks. Some of the sectors where we remain positive are Banking, including quality PSU Banks, commodities, real estate, capital goods, and healthcare.
Currency update
In Friday's session, the USD-INR spot made a gap up opening at 75.38 levels from the previous close of 74.93 levels. After opening it straightaway moved in the bullish territory towards 75.41 levels. On the other hand, USD-INR February Futures too made a high of 75.65 levels. The prime reason for this upward trend could be attributed to the rally seen in the offshore NDF market along with some suspected corporate dollar buying, said Heena Naik, Research Analyst - Currency, Angel One Ltd.
Moreover, the US Dollar Index too remained in the bullish territory after the release of US CPI data that showed the highest inflation since 1982.
"Going forward, we expect both USDINR Spot (CMP: 75.34) and USD-INR February ’22 Futures (CMP: 75.45) to continue their upward trend and move towards 75.70 and 76.10 levels respectively," said Naik.
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