Markets seem to be on a cautious path with surging inflation, the key point of concern on trading floors. Inflation is surging to levels not seen in decades owing to a spike in demand and supply chain snarls forcing policymakers to turn off the taps, said an analyst.
“Still, for now, investors remain optimistic, with markets sitting at or just below all-time highs. Domestic markets may look to continue their positive momentum tracking gains across Asian markets despite a sluggish session on Wall Street overnight,” said Sageraj Bariya, Vice President – Institutional Sales, East India Securities.
How are bluechips doing
After opening in the red, benchmark indices extended their fall. At 10.00 am, BSE flagship Sensex was down 185 points or 0.30 per cent to 60,533. NSE benchmark Nifty declined 29 points or 0.16 per cent to 18,080.
“On the technical front, if markets sustain well above 18,000 levels for 2-3 sessions, we can easily witness 18,500-18,600 levels in the near term once again. Immediate support and resistance level in Nifty50 are 18,000 and 18,250, respectively,” said Mohit Nigam, Head – PMS, Hem Securities.
In the 50-share pack Nifty, L&T was the biggest gainer, up 1.33 per cent. Adani Ports, Tata Motors, Coal India, Maruti Suzuki, Hero MotoCorps, Bajaj Finserv and SBI Life Insurance were among other gainers.
Kotak Mahindra Bank was the top loser in the pack, down 1.21 per cent. HDFC, UPL, Reliance Securities, Indian Oil, Asian Paints, Eicher Motors and Cipla were among those that traded in the red.
Factors driving markets
Lagarde not in favour of rising rates: Tightening monetary policy now to rein in inflation could choke off the euro zone’s recovery, European Central Bank President Christine Lagarde said on Monday, pushing back on calls and market bets for tighter policy.
Yields, dollar trades strong: Benchmark US Treasury yields inched lower on Tuesday and were last at 1.6094 per cent though still up sharply since a one-month low of 1.42 per cent hit one week ago. Rising yields also helped the dollar, which stayed strong at a 16-month high against a basket of its peers.
Xi-Biden meet: Markets also await some positive signs to come out of the virtual summit between Chinese President Xi and his US counterpart Biden, although no major breakthroughs are expected. An ease in trade tension only could be a potential outcome.
Broader markets
Broader market indices were trading higher, outperforming their headline peers in morning trade. Nifty Smallcap was up 0.22 per cent while Nifty Midcap advanced 0.05 per cent. The broadest index on NSE, the Nifty 500 was down 0.11 per cent.
Coforge, IRCTC, Indian Hotels, Balaji Amines, Cyient and MCX were gainers from the space while Fine Organics, KPIT Tech, Anupam Rasayan, Ipca Labs, Endurance Tech and Trent were under selling pressure.
Global markets
MSCI’s broadest index of Asia-Pacific shares outside Japan rose 0.27 per cent to a 2-1/2 week high, while Japan’s Nikkei gained 0.39 per cent.
Chinese blue chips rose 0.4 per cent and the Hong Kong benchmark rose 0.7 per cent, helped by property stocks. An index of Hong Kong listed mainland Chinese developers rose as much as 3 per cent.
US stock futures, the S&P 500 e-minis, advanced 0.11 per cent, and Nasdaq futures gained 0.17 per cent.
