Sensex, Nifty stare at a gap-down opening today, as hot US CPI inflation roils global markets

Sensex, Nifty are likely to open in red on February 14, following weak global markets.

After recovering yesterday from the meltdown over the previous two trading sessions, Indian stocks may see a precipitous fall today following negative cues from the US markets last night. All major US indices fell more than 1.5 percent at close last night following hotter-than-expected inflation data. The S&P 500 and Nasdaq 100 fell 1.4 percent and 1.6 percent respectively recording the biggest CPI-day fall since September 2022.

While market experts now set their eyes on other US data like private consumption and jobs, it has now become amply clear that a rate cut from the US Fed in March is ruled out. US CPI data showed prices rose 3.1 percent on an annual basis and 0.3 percent on a monthly basis -- faster than the expected 2.9 percent and 0.2 percent, respectively.

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“If Powell and other Fed members hadn’t already thrown cold water on the prospects for a March rate cut a few weeks ago, today’s CPI report might have done that,” said a Blomberg report quoting Jason Pride at Glenmede. A similar view was expressed by Wilensky at Janus Henderson Investors: “While the door for a March cut had already been effectively shut given the recent Fed commentary and the jobs reports, the Fed has now locked the door and lost the key.”

In response to the adverse inflation data, US 10-Year treasuries advanced 14 basis points to 4.31 percent, and the dollar index gained 0.6 percent. Asian markets also showed similar weakness this morning, with Japan’s Nikkei 225 index trading down 0.44 percent, and Korea’s Kospi tumbling 1.7 percent. At GIFT City IFSC, Gift Nifty fell over 200 points this morning to 21,630.

Weakness in the dollar index spells bad news for emerging markets including India. Stocks could thus trade weak in the next couple of sessions.

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Amit Goel, Co-Founder and Chief Global Strategist at Pace 360, said the negative news from global markets creates a “double whammy” for Indian stocks given that local markets here were already looking weak. The Q3 results this season have been nothing to write home about. Disappointing results in a number of companies have been met with sharp reaction in stock prices.

Kranthi Bathini, Director of Equity Strategy in Wealth Mills Securities, said, “There will be a bloodbath for Indian markets today.”

Earlier, on February 13, Indian markets gained. NSE Nifty 50 rose 0.6 percent or 127 points to close at 21,743, while BSE Sensex gained 483 points to 71,555 at close. Banking index Bank Nifty jumped 1.4 percent or 620 points to end the session at 45,502.

Nifty's immediate resistance is at 21,800-21,850 levels while support is at 21,500 mark. Bank Nifty's support is at 45,002 and resistance is at 45,588.

More market views

Vikas Gupta, CEO & Chief Investment Strategist of Omniscience Capital: After yesterday’s sharp reaction in the US markets, will wait for more data -- the US private consumption expenditure data and employment data -- for further cues. The negative sentiment is likely to be temporary if the employment data continues to be strong as has been the case thus far.

Siddharth Bhamre, Head of Research of Religare Broking: There is no reason for a prolonged correction in the market. This does not impact the medium-term outlook for Indian markets.

Amit Goel, Co-Founder and Chief Global Strategist at Pace 360: Waiting to see Nvidia’s quarterly numbers which will come out on February 21. That’s because the current rally is based on the AI theme, and since Nvidia is the company which epitomises the AI rally, Nvidia’s earnings will determine the market sentiment going forward.

Disclaimer: The views and investment tips expressed by experts on Moneycontrol are their own and not those of the website or its management. Moneycontrol advises users to check with certified experts before taking any investment decisions.