Sensex, Nifty volatile as investors await US inflation print; largecaps to support bullish tone ahead

Equity benchmarks Sensex and Nifty were volatile on March 12 as investors awaited US inflation data to map the trajectory of interest rate cuts. Going ahead, analysts see stage set for Nifty to head towards 23,000 as sectoral rotation plays out, favouring largecaps over small-and midcaps.

Sensex trimmed 337 points from day's high to settle at 73,667, up 0.2 percent, whereas NSE Nifty 50 was down 117 points from the day's high of 22,452 to end at 22,335 on March 12.

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Analysts at ICICI Securities expect Nifty to head towards 22,700 in the coming weeks, wherein large caps would relatively outperform the broader market. "Any bouts of volatility should be used as a buying opportunity, with support placed around 22,200," the brokerage firm said.

Aamar Singh Deo, Senior Vice President of Angel One, too, believes that largecaps would lend support to markets' positive momentum going ahead as investors will try to reduce their risk-appetite.

Meanwhile, broader markets bled as Nifty Midcap 100 and Nifty Smallcap 100 indices slipped over 1 percent each on March 12. Fear gauge, India VIX cooled off by 2 percent to trade around 13 level.

Apart from Nifty IT and Financial Services that bucked the overall trend, all other sectoral indices slipped in the negative territory. Nifty PSU Bank and Realty indices were the top sectoral laggards as they declined up to 3 percent.

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Market participants will keenly watch out US inflation figures due March 12 to understand Federal Reserve's monetary policy trajectory. Last month, the US annual inflation rate remained at 3.1 percent, slightly higher than forecasted 2.9 percent, whereas core inflation was steady at 3.9 percent.

Currently, analysts expect mixed outcome for US consumer price index in February, with the CPI index remaining unchanged at 3.1 percent and core inflation easing to 3.7 percent from 3.9 percent.