Indian Markets to Open Higher on Easing Inflation Data
India’s benchmark indexes may open higher on Wednesday, after logging their biggest daily losses in a month in the last session, lifted by milder-than-expected US and domestic inflation numbers for April.
The Indian equity market has been under pressure in recent sessions due to rising inflation concerns, which led to a sharp sell-off in the previous trading session. However, the inflation data released on Tuesday provided a much-needed relief to the market, and investors are expected to take a more optimistic view going forward.
The Consumer Price Index (CPI) data for April, released by the US Bureau of Labor Statistics, showed a 0.3% rise, which is lower than the expected 0.4% increase. This easing in inflationary pressures in the world’s largest economy is likely to have a positive impact on Indian markets.
In India, the wholesale price-based inflation (WPI) data for April also showed a decline, with the WPI index falling to 3.18% from 3.85% in the previous month. The CPI data for April is due to be released later this week, and investors are hoping for a similar trend of easing inflationary pressures.
The Gift Nifty futures were trading at 24,729.5 as of 8:15 am IST, indicating that the Nifty 50 will open above Tuesday’s close of 24,578.35. The Sensex futures were trading at 24,591.5, suggesting that the Sensex will also open higher.
The easing inflation data has led to a rally in the bond market, with the 10-year benchmark yield falling to 6.53% from 6.62% in the previous session. This decline in yields is likely to support the equity market, as it makes bonds less attractive and encourages investors to shift their funds to equities.
The rupee also strengthened against the US dollar, with the local currency trading at 75.27 against the greenback, up from 75.48 in the previous session. A stronger rupee can boost the earnings of Indian companies, as it reduces their costs and increases their competitiveness in the global market.
The easing inflation data has also lifted the sentiment in the currency market, with the rupee expected to continue its upward journey in the near term. This could lead to a further rally in the equity market, as investors become more optimistic about the prospects of Indian companies.
In the previous trading session, the Nifty 50 index had fallen by 1.45%, its biggest daily loss in a month, to close at 24,578.35. The Sensex had also fallen by 1.35% to close at 24,451.45. However, the easing inflation data has led to a change in sentiment, and investors are expected to take a more optimistic view going forward.
The Indian equity market has been under pressure in recent sessions due to rising inflation concerns, which have led to a sharp sell-off in the bond market. The yields on government securities have risen sharply, making bonds less attractive and encouraging investors to shift their funds to equities.
However, the easing inflation data has led to a decline in yields, making bonds more attractive and encouraging investors to shift their funds back to the bond market. This could lead to a further fall in the equity market, as investors become more cautious and prefer to invest in bonds.
In conclusion, the Indian markets are likely to open higher on Wednesday, lifted by milder-than-expected US and domestic inflation numbers for April. The easing inflation data has led to a rally in the bond market, and the rupee has also strengthened against the US dollar. Investors are expected to take a more optimistic view going forward, and the Indian equity market is likely to continue its upward journey in the near term.
