Sensex, Nifty lose momentum as rising domestic and US inflation spooks investors on Dalal Street

Benchmark stock market indices opened marginally lower on Wednesday as a sharp rise in November retail inflation dampened the mood on Dalal Street.

The S&P BSE Sensex was down 0.6 per cent at 69,511.96 at 9:36 am, while the NSE Nifty 50 fell 0.04 per cent to trade at 20,897.05. Most of the broader market indices were also trading weaker, but in positive territory.

Major sectoral indices such as Nifty Bank and Nifty Auto fell in early trade. However, Nifty IT suffered the biggest loss as CPI inflation rose in the US as well, reducing optimism regarding a possible rate cut by the end of the financial year.

The top five gainers on the Nifty 50 were NTPC, Eicher Motors, Ultratech Cement, Hero MotoCorp and Power Grid Corporation. On the other hand, the top losers were Axis Bank, TCS, HDFC Life, Infosys and ONGC.

India’s retail inflation surged to 5.55 per cent in November, solely due to a sharp rise in food price. While this is almost in line with what analysts had predicted, it has sparked fresh concerns among investors.

Moreover, a surprise rise in US inflation has also impacted domestic stocks, especially IT companies. The rising inflation just ahead of the US Federal Reserve’s policy decision could lead to hawkish commentary on interest rates that are likely to dampen foreign investor sentiments.

Ahead of today’s market opening, Deven Mehata, research analyst at Choice Broking, said, “The benchmark Sensex and Nifty indices are likely to open in the green on December 13 as trends in the GIFT Nifty indicate a positive start for the broader index with a gain of 55 points.”

“Nifty can find support at 20,900 after a gap up opening, followed by 20,850 and 20,800. On the higher side, 21,020 can be an immediate resistance, followed by 21,100 and 21,150,” he noted.

“The latest CPI inflation rate of 5.55 per cent is lower than projected, with economists anticipating a 5.8 percent year-on-year increase in November. Lower-than-expected CPI in India will be a positive indication, and IIP growth of 11.7 per cent, the highest in 16 months, will assist markets rise. Traders and investors should buy on dips with a stop loss of 20750,” Mehata added.

Published By:

Koustav Das

Published On:

Dec 13, 2023

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