US inflation data came slightly lower than expected and confirms the Fed thesis that inflation is transitory. The positive response of Dow and S&P to the inflation numbers and the decline in the Dollar index will strengthen the bulls, said an analyst.
“Investors should exercise caution in this exuberant bull market since valuations are stretched and risks are rising. Healthy development in the market is the steady removal of froth in the mid-and smallcap segments. At the same time, the return of quality like HDFC twins, Kotak Bank, Bharti, and RIL bode well for the market health,” said VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services.
How are the bluechips doing?
After opening in the green, benchmark indices held above the flatline. At 9.27 am, BSE flagship Sensex was up 74 points or 0.14 per cent to 54,600. NSE benchmark Nifty advanced 14 points or 0.09 per cent to 16,296.
“On technical front, Nifty50 shall continue on its upside momentum with support levels of 16,100 and the near-term resistance at 16,400. We believe any significant dip is a good opportunity to accumulate quality stocks in these markets,” said Mohit Nigam, Head – PMS, Hem Securities.
In the 50-share pack Nifty,
was the biggest gainer, up 1.90 per cent. ITC, M&M, , UPL, Adani Ports, Hindalco, Bajaj Auto, Coal India and Shree Cement were among other gainers.
Dr Reddy’s Labs was the top loser in the pack, down 0.63 per cent. Divi’s Labs, Kotak Mahindra Bank, Eicher Motors, Sun Pharma, Axis Bank, Bajaj Finserv and Insurance were other losers in the pack.
FACTORS DRIVING MARKETS
Good news
Inflation cools off: US consumer prices increases slowed in July even as they remained at a 13-year high on a yearly basis and there were tentative signs inflation has peaked as supply-chain disruptions caused by the pandemic work their way through the economy. Analysts expect a similar trend in India as well.
Bad news:
Hawkish tones: Dallas Federal Reserve President Robert Kaplan said the US Federal Reserve should announce its timeline for beginning to reduce its massive bondholding next month and start tapering them in October.
Broader markets
Broader market indices were trading higher, outperforming their headline peers in morning trade. Nifty Smallcap was up 0.91 per cent while Nifty Midcap advanced 0.59 per cent. Broadest index on NSE, Nifty 500 was up 0.31 per cent.
VIP Industries, Sequent Scientific, Radico Khaitan, Bata India, Concor and Godrej Agrovet were gainers from the space while Adani Total Gas, IDFC First Bank, Cummins India, KEI International, PNB Housing and IDFC were under selling pressure.
Global markets
MSCI’s broadest index of Asia-Pacific shares outside Japan dropped 0.25 per cent in early trading, dragged by a 0.24 per cent decline in Chinese bluechips. The Hong Kong benchmark fell 0.2 per cent, while Australian shares were largely flat and Japan’s Nikkei rose 0.35 per cent.
US stock futures were little changed, with S&P 500 e-minis down 0.02 per cent.
The weaker performance by Asian benchmarks contrasts with the situation elsewhere in the world. On Wednesday the MSCI all-country index, a gauge of stocks across the globe, hit a record high.
