Amidst the backdrop of a previous session’s record-breaking performance, equity benchmark indices commenced the trading day on April 12 with a downward adjustment, attributed to a combination of profit-taking by investors and subdued trends observed across Asian markets. This shift arrives in the wake of a rally that had propelled the markets to new heights but was dampened by the prospect of enduring U.S. inflation that tempered expectations of an imminent interest rate cut by the Federal Reserve.
Starting the day on a weaker note, the 30-share BSE Sensex descended by 324.12 points to rest at 74,714.03, while the NSE Nifty experienced a 96.6-point decline, positioning itself at 22,657.20. The early trade reflected a rebalancing of positions across the board, with companies such as JSW Steel, Maruti, Asian Paints, ITC, Kotak Mahindra Bank, and HDFC Bank emerging as the primary laggards from the market’s basket. However, not all stocks were ensnared by the downward trend, as NTPC, Tata Motors, Larsen & Toubro, and Nestle secured positions among the gainers.
A glimpse into the broader Asian markets revealed mixed sentiments, with Tokyo’s market showing some positive dynamics, while others, including Seoul, Shanghai, and Hong Kong registered lower quotes. Contrasting this, Wall Street ended its previous session on a mostly positive note, as of April 11.
V.K. Vijayakumar, Chief Investment Strategist with Geojit Financial Services, provides insights into the current situation. He notes that the unexpectedly high U.S. inflation has led to a spike in U.S. bond yields, a factor generally considered negative for Foreign Portfolio Investment (FPI) inflows. Despite these implications, Vijayakumar maintains a view of resilience within the Indian market, acknowledging that it has been buoyed primarily by robust domestic liquidity, rather than external factors.
With the global equity market taking note of the persistent U.S. inflation, the general outlook has been shaded with caution, especially given the diminishing prospects of three rate cuts by the U.S. Yet, the inflation narrative also unveils a silver lining – the extraordinary tenacity of the U.S. economy. This resilience is seen as a counterbalancing force capable of fostering earnings growth, which in turn supports both the U.S. stock market and by extension, other markets including India’s, according to Mr. Vijayakumar.
Furthering the economic landscape, the global oil benchmark Brent crude experienced a 0.58% ascent, with prices reaching $90.26 a barrel. Market contributors such as Foreign Institutional Investors (FIIs) also displayed continued confidence, with equity purchases amounting to ₹2,778.17 crore as per exchange data dated April 10.
This complex interplay of factors has not gone unnoticed by market analysts. Prashanth Tapse, Senior VP (Research) at Mehta Equities Ltd., remarks on the perturbed market sentiments precipitated by the U.S. CPI inflation data. The data has sparked questions about the Federal Reserve’s rate-cut trajectory, casting a shadow of doubt over potential rate reductions for the year 2024.
Nevertheless, the anticipation of strong Q4 corporate earnings and a pre-election rally remain formidable catalysts within the market, a sentiment that finds reflection in the net buying activity from both FIIs and Domestic Institutional Investors (DIIs).
The market’s previous zenith was recorded when the BSE benchmark surged by 354.45 points or 0.47% to establish an all-time high of 75,038.15 on April 10, alongside the Nifty, which saw an advancement of 111.05 points or 0.49% to reach a record closing peak of 22,753.80. During intraday trade, it even soared to a lifetime peak of 22,775.70, by a margin of 132.95 points or 0.58%.
Amidst this flurry of activity, it is to be noted that stock markets remained closed on April 11 in observance of Eid-Ul-Fitr, providing a brief respite from the bustling trade. As the markets reopen, all eyes are on the ebb and flow of dynamics that continue to shape the financial landscape.
