Markets To Open Positive As Wallstreet Surges Ahead Of Lower Interest Hike Expectations

Indian markets will be guided by the positive Wallstreet close. A pullback is on the cards for both Nifty and Bank Nifty, especially after four consecutive days of hammering.

Nifty is poised for a gap up. SGX Nifty is trading 72 points higher at 17212. The Asian markets also are trading positively today morning.

The US markets rebounded on the hope of a less aggressive rate hike than expected as CPI inflation data came in. The Dow ended up 1.06% after a five-day losing streak. The US annual CPI inflation declined 6% vs. 6.4% on YoY basis and 0.4 Vs.0.5% on MoM basis. Both numbers were in line with estimates. However, the core CPI MoM for February was marginally higher at 0.5% Vs. 0.4% while the core CPI YoY came in at 5.5% Vs. 5.6% as expected.

US Markets reacted positively to this and are pricing in a 25bps hike which is less aggressive with an 85% probability. CPI continues to fall for eight consecutive months but still remains elevated as per Fed’s target.

US banking stocks recover some lost ground. First Republic Bank surged along with many other regional banks. The KBW Nasdaq Bank Index is trading higher by 2.8% on Tuesday after it 11.7% on Monday but still far away from where it fell.

Facebook parent Meta Platforms rallied 7.3% after it announced to cut 10,000 jobs.

Local factors

With the Met department predicting harsh summer consumer goods, FMCG and beverages companies are ramping up production.

The Wheat production in Agriculture Year 2022-23, as per Second Advance Estimates, is estimated at 112.18 million tonnes which is higher by 4.44 million tonnes than the production achieved during 2021-22, Agriculture & Farmers Welfare Minister Narendra Singh Tomar told Lok Sabha.

Also Read: Market Round-UP: Bears Refuse To Loosen Their Grip

Stocks to watch

SBI has announced that it will hike its base lending rate and prime lending rates by 70bps.

Competition Commission of India clears Reliance Industries Rs.28.5 billion acquisition of German retailer Metro AG’s local business.

Bharti Airtel has in a bid to boost its average revenue per user (ARPU) extended its base prepaid rate hike to all 22 circles. Gujarat, Madhya Pradesh and Kolkata were the only three circles where the tariff hike was yet to be implemented while the rest of the 19 circles were already covered earlier.

Hindustan Petroleum Corporation (HPCL) has entered into an agreement to manufacture, distribute and market lubricants of global supermajor Chevron in India. With this development Caltex¬ branded lubricants will be manufactured, distributed, and marketed in India by HPCL.

The case for the bears

The bull party may be short-lived if the Fed hikes more than 25 bps. Moody’s has downgraded the entire US Banking System. Moody’s has changed to a negative from a stable outlook on the US banking system. This can be reason enough for the bears to come back. However, for the present bulls are expecting a lower rate cut and hawkish guidance.

The pullback has to be treaded cautiously. All pullbacks need not be a trend change. The financial sector is still not out of the woods. Caution ahead.