Informist, Tuesday, May 24, 2022
By Vivek Kumar
MUMBAI – Benchmark indices are likely to remain weak on Wednesday as investors may refrain from placing any bullish bets ahead of the release of the minutes of the US Federal Reserve's last policy meeting.
A subdued market sentiment led to the benchmark indices ending lower for a second consecutive day after hovering between gains and losses in both trading sessions.
The Nifty 50 continues to see selling pressure and every rise is getting sold, said Shubham Sontakke, an independent trader and analyst. The trend will change once it crosses 16450 points, which has the highest open interest on the call side, Sontakke added.
Today, the Nifty 50 ended 0.6% lower at 16125.15 points, and the Sensex fell 0.4% to close at 54052.61 points. Market participants believe 16400-16450 points will continue to be a hurdle for the 50-stock index, while on the lower level, holding on to 16000 points will be crucial.
While the release of US flash manufacturing and services Purchasing Managers' Index for May later today will be on investors' radar, the focus will be more on minutes of the Federal Open Market Committee's meeting held on May 3-4, to be released on Wednesday, and the movement of bond yields ahead of that.
Investors will closely watch out for any cues on the quantum of rate hikes in the upcoming meetings. Fed Chair Jerome Powell had said last week that the central bank may be more aggressive if inflation does not abate.
Consumer price inflation in the US fell to 8.3% in April from 8.5% last month. However, this fall was less than expected, and upward price pressures still persist.
The speed at which rate hikes were conducted by central banks took capital markets by surprise, thereby resulting in expectations of further rate hikes, said ICICI Securities in a report. "In our view, if further aggressive rate hikes do not materialise, it will be a positive surprise for equities. But if expectation of aggressive rate hikes are met, it will keep equity valuations subdued although the shock and awe situation will recede," the brokerage added.
Back home, volatility in the market may increase as investors will roll over positions to the June derivatives series with May contracts expiring on Thursday.
SECTORS & STOCKS
The Nifty Bank index managed to buck the market trend and end higher today, but it came sharply off the day's highs. After having risen 1% during the day, the sectoral index only managed to end 0.1% higher at 34290.15 points.
Analysts believe the Nifty Bank index may need to surpass 35000 points to see any meaningful upside. Shares of banks hold the highest weightage in the Nifty 50, and market participants believe the trend on these counters will dictate the market movement ahead.
Analysts have pinned their hopes on the financial sector due to positive earnings by banks, and underlying weakness in other major sectors like information technology and metals.
Stock-specific action will also be prominent on Wednesday with a slew of companies scheduled to detail their Jan-Mar earnings, including Apollo Hospitals Enterprise, Coal India and Bharat Petroleum Corp. Shares of Adani Ports and Special Economic Zone, and Grasim Industries are also expected to react to their earnings.
InterGlobe Aviation, Bank of Maharashtra, Easy Trip Planners, Whirlpool of India, National Aluminum Co and HEG are among other companies that will report earnings on Wednesday.
Meanwhile, State Bank of India and Tata Consultancy Services will also be in focus as the stocks will trade ex-date for dividend. End
Edited by Tanima Banerjee
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