Indian markets could open flat despite largely higher Asian markets today and mildly positive US markets on Tuesday, said Deepak Jasani, Head-Retail Research, HDFC Securities.
Key domestic benchmark indices may log gains in early trades, tracking upmove in other Asian gauges but volatility would continue amid uncertainty due to rising inflation levels, US bond yields and fresh surge in oil prices. Prashanth Tapse, Vice President (Research), Mehta Equities Ltd said, market turbulence may be a theme in today’s trading session as Dalal Street heads for a long weekend.
Stock selection is likely to become more important as investors need to distinguish which companies are most impacted by rising costs, and which have the pricing power to pass those higher costs through to consumers and maintain their profit margins.
Focus will also be on Infosys' Q4 results which will be the biggest catalyst for the day. The street will spy with one big eye on the management commentary —— primarily on future outlook, attrition rates, and deal momentum.
Nifty closed lower for the second consecutive session on April 12 in line with other global markets. Nifty closed 0.82 percent or 144.7 points lower at 17,530.3.
Nifty, after falling gap-down, has formed a hammer like pattern after a fall, suggesting possibility of an upward reversal. Advance decline ratio fell to much below 1:1 suggesting broad based profit taking in the markets. Nifty could remain in the 17,405-17,601 band in the near-term.
Mohit Nigam, Head - PMS, Hem Securities said, benchmark indices are expected to open on a flat to positive note as suggested by trends on SGX Nifty. US stock markets ended lower on Tuesday as investors are reacting to inflation data, as US inflation jumped 8.5 percent in past year, highest since 1981. Dow Jones was down by 87.4 points, whereas NASDAQ was down by 0.36 percent to 13,940.0 levels.
On the technical front 17,400 and 17700 are immediate support and resistance in Nifty 50. For Bank Nifty 37200 and 38000 are immediate support and resistance respectively.
Results today
Infosys, Den Networks, and Lesha Industries etc will release quarterly results today
Asian stocks up
Asian stocks and US equity futures rose Wednesday, while Treasuries dipped, as investors calibrated economic risks from inflation.
MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.5 percent and Japan's Nikkei jumped 1.54 percent. S&P500 futures gained 0.2 percent and Nasdaq futures gained 0.57 percent in Asia trade.
Asian markets are trading on positive side as investors watch for market reaction to the release of a slightly hotter-than-expected US inflation report. Nikkei is trading 0.55 percent higher and Topix index is trading at 0.39 percent higher.
Chinese blue chips stocks down
Chinese blue chips fell 0.7 percent and Hong Kong lost 0.2 percent. They were little changed by Wednesday customs data which showed China's exports rose 13.4 percent in yuan terms year on year in January-March, while imports increased 7.5 percent. China reported 26,525 new asymptomatic coronavirus cases and 1,513 symptomatic ones on Wednesday.
US stocks dip
US stocks ended modestly lower Tuesday, erasing earlier gains, as investors questioned whether the sharpest rise in the consumer price index in more than 40 years marks peak inflation.
US consumer prices rose 1.2 percent in March, the Labor Department reported on Tuesday. Year over year, prices rose 8.5.percent— the fastest pace since January 1982.
Core price growth slowed to a 0.3 percent monthly rise versus expectations for a 0.5 percent increase. That still nudged the year-over-year rate to a 40-year high of 6.5 percent.
The US federal budget deficit narrowed sharply to $192.7 billion in March, down from $659.6 billion in the same month last year, the Treasury Department said Tuesday. Last March, the government was still sending out payments to Americans under the final stimulus package during the pandemic.
India industrial growth up
India's industrial growth, as per the Index of Industrial Production (IIP), edged up to 1.7 percent in February from 1.5 percent in January. Though industrial output increased at a greater rate in February than in January, the rate of expansion remains subdued. The manufacturing sector, which makes up over three-fourths of the IIP, grew by a mere 0.8 percent in February, down from 1.3 percent in the first month of 2022.
Growth in capital goods output, however, slowed to 1.1 percent on a year-on-year basis from 1.4 percent in January, while consumer durables and non-durables witnessed a contraction compared to the same month last year.
Retail inflation jumps to 17-month high
India's retail inflation jumped to a 17-month high of 6.95 percent in March from 6.07 percent in February, led by a rise in prices of food items. Fuel prices, which were raised towards the end of March, are not fully captured in the current data suggesting that inflation may remain elevated. Core inflation, excluding food and fuel, rose to 6.53 percent in March, compared to 6.22 percent in February.
This is the highest since June 2014.
Privatet sector capex cycle to see revival
Asserting that the economic situation is likely to improve during the year, Chief Economic Adviser V Anantha Nageswaran on Tuesday expressed hope that the private sector is expected to accelerate capital expenditure from the second half of the current fiscal.
The investment from private sector has been muted for past many years despite several measures, including corporate tax cut, taken by the government to reinvigorate it.
Crude prices up
Brent crude futures gained 0.38 percent on Wednesday to $105.09 and US West Texas Intermediate rose 0.55 percent to $101.12.
Oil prices settled higher on Tuesday as lockdowns eased in Shanghai and as Russian oil and gas condensate production fell to 2020 lows and OPEC warned it would be impossible to replace potential supply losses from Russia.
WTI crude futures jumped more than 7 percent to above $100 per barrel on Tuesday, recovering from a 4 percent loss in the previous session, domestic markets were also settled on a stronger note at Rs 7646 per barrel, up by 6.55 percent on relief about demand in China after Shanghai eased some virus restrictions.
Also, OPEC warned it would be nearly impossible to replace Russian oil lost by a possible ban from the EU.
The EU is reportedly drafting proposals for an oil embargo on Russia although there was no agreement to ban Russian crude. Meanwhile, the cartel cut forecasts for both global oil consumption and supply this year. Crude oil prices also getting support as US Natural Gas futures at Over 13-year high, the highest since 2008 due to short supply from the Russia.
Rahul Kalantri, VP-Commodities, Mehta Exports said, "We expect crude oil prices will remain volatile in today’s session, Crude oil is having support at $98.10-$95.50 and resistance is at $102.40–104.50, In INR terms crude oil has support at Rs 7,540-7,380; while resistance is at Rs 7,840–7,980."
Bullion outlook
Gold rallied for a fifth straight day as Treasury yields sank following core US inflation data largely met expectations, reducing the likelihood of long-term aggressive policy tightening by the Federal Reserve. Gold June futures contract were settled at $1,976.10 per troy ounce, up by 1.43 percent and silver May futures contract were settled at $25.73 per troy ounce, up by 2.98 percent.
Domestic markets were also settled on a positive note. Increasing crude oil & nature gas prices also resist world growth story that is supportive for bullion. Despite the hotter-than-expected inflation numbers in March, some economists believe that the first month of spring will mark the peak in price pressures.
First two days of week saw a good rally in gold and silver; they appeared to break out and reverse the trend. Rahul Kalantri, VP-Commodities, Mehta Equities said, "We expect gold and silver keep their positive momentum but ahead for long weekend holiday may show less liquidity.
Gold has support at $1948-1930, while resistance at $1982-2000. Silver has support at $25.10- 24.82, while resistance is at $25.84-26.05." In INR terms gold has support at Rs 52,620–52,380, while resistance is at Rs53,120–53,330. Silver has support at Rs 68,350- 67,980 while resistance is at Rs 69,100–69,440.
Currency outlook
USDINR 27 April futures contract breached its major resistance level of 76.06 again on a daily closing basis. On the daily technical chart a pair is trading above its resistance level of 75.85. As per the daily technical chart, we observed that a pair is sustaining above 75.85 levels and technical chart is showing positive momentum. Rahul Kalantri, VP-Commodities, Mehta Exports said, "Looking at the technical set-up, if a pair continues to sustain above 76.06; could show further strength towards 76.40-76.55 in the upcoming sessions."
