Markets may begin the session on a cautious note amid weakness in SGX Nifty, although US markets jumped sharply in overnight trades.
Prashanth Tapse, Vice President (Research), Mehta Equities Ltd said, Our call of the day suggests that after yesterday’s spectacular rebound, the door is open for additional Nifty recovery gains. However, cautious optimism is likely to be the preferred theme amidst headwinds like WPI inflation hitting 15.08% in April, European commission cutting Eurozone growth forecast lower, WTI crude oil struggling to hold $115 per barrel, and relentless selling from the FIIs camp as they sold shares worth Rs. 36,682 mark in May so far. Technically speaking, the Nifty has support at 15971 and below the same, it could swiftly move to 15671 mark. The index could find strength only above 16607 mark on closing basis with 200- DMA at 17253 mark.
Devarsh Vakil, Deputy Head Retail Research, HDFC Securities, said On May 17, after gap-up opening of more than 50 points, Nifty continued its upward journey throughout the day and closed at the day’s high. Nifty ended the day with the whopping gains of 417 points or 2.63 percent to close at 16,259 levels. This was the highest one-day rise in percentage terms since 15 Feb 2022. Advancing shares outnumbered the declining shares on Tuesday, the highest since 1 April 2022.
Nifty has managed to close above its 5 and 10 days EMA with a long bull candle on the daily charts. Nifty made a double bottom at 15740 over two days and now support for the Nifty has shifted up to 16000, while 16403 is stiff resistance in the short term. Markets are likely to consolidate yesterday's gains in today's session and trade in a narrow range.
On May 17, Sensex rallied 1,345 points, logging the biggest daily rise in three months. The broader Nifty was above 16,250 at the closing bell.
Asian stocks wobble
Asia's stockmarkets struggled to carry recent gains into a fourth straight session on Wednesday and the US dollar steadied, as nagging doubts about inflation and the drag from rate rises crept back in to the global growth outlook. MSCI's broadest index of Asia-Pacific shares outside Japan gave up earlier gains to trade around flat by mid-morning. Japan's Nikkei rose 0.3 percent although miners did help Australian shares up about 0.7 percent.
Benchmark 10-year Treasuries were steady in Asia and the yield sat just below 3 percent at 2.9805. European yields are also rising as the likelihood of the European Central Bank hiking rates by 25 basis points around July is firming. Dutch central bank chief Klaas Knot said overnight a bigger rise shouldn't be ruled out.
Japan's Q1 growth forecast slashed
Japan’s economy shrank for the first time in two quarters in the initial three months of the year as COVID-19 curbs hit the service sector, and the Ukraine war and surging commodity prices created new headaches for consumers and businesses, Reuters said
The decline presents a challenge to Prime Minister Fumio Kishida’s drive to achieve growth and wealth distribution under his “new capitalism” agenda, stoking fears of stagflation – a mix of tepid growth and rising inflation.
US Fed to keep hiking rates
US Fed Chairman Jerome Powell on Tuesday said the Fed will keep raising interest rates until there is clear evidence inflation is steadily falling — a high-stakes effort that carries the risk of causing an eventual recession. he Fed's increases in its benchmark short-term rate typically lead, in turn, to higher borrowing costs for consumers and businesses, including for mortgages, auto loans and credit cards, Associated Press report said.
US markets rebound on robust economic data
US stocks closed sharply higher Tuesday after retail sales data for April suggested the economy remained healthy and as investors weighed remarks by Federal Reserve Chairman Jerome Powell. A mostly upbeat economic calendar appeared to aid sentiment, as retail sales, industrial production, capacity utilization, and business inventories rose.
The Dow Jones Industrial Average rose 431 points or 1.3% to 32655, the S&P 500 Index increased 81 points or 2.0 percent to 4089 and the Nasdaq Composite rallied 322 points or 2.8 percent to 11985.
US retail sales rose 0.9 percent last month while data for March was revised higher to show sales advancing 1.4 percent instead of 0.7 percent as previously reported. The U.S. central bank will "keep pushing" to tighten US monetary policy until it is clear inflation is declining, Fed chair Jerome Powell said at a Wall Street Journal event.
The Dow Jones Industrial Average rose 431 points or 1.3 percent to 32655, the S&P 500 Index increased 81 points or 2.0 percent to 4089 and the Nasdaq Composite rallied 322 points or 2.8 percent to 11,985. Citigroup shares jumped 7.6 percent after a regulatory filing showed that Warren Buffett’s Berkshire Hathaway took a nearly $3 billion stake in the bank during the first quarter.
The ICE US Dollar Index, a measure of the currency against a basket of six major rivals, fell 0.8%, pulling back after a recent surge that took it to a roughly 20-year high. Crude oil prices ended lower in choppy action, while gold was little changed. Europe was higher, and Asia finished in the green following positive real-time COVID data.
(With inputs from Reuters, Agencies)