Gift Nifty indicates below 19,500 open for Nifty50

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There are no signs for relief for domestic markets amidst negative global cues. The US Federal Reserve’s tough talk on inflation and the rising US yields have weakened the sentiment for equity investors across the globe.

Gift Nifty is ruling at 19,510 against Nifty futures closing of 19,618, signalling a gap down opening of about 120 points. With the mid-cap and small-cap witnessing the sell-off, analysts expect the market to remain volatile with downward bias.

Second quarter results are mixed. Most of the IT companies have reported underwhelming results so far. While banks and top FMCG companies reported better numbers, other sectors such as industrials, cement reported on expected lines.

The latest developments in the global rates markets are a reminder that a return to normalcy requires more time. The resilience in both inflation and growth is reinforcing the higher-for-longer (HFL) stances of central banks even as financial and geopolitical shocks loom over the outlook, said domestic brokerage Emkay Global Financial.

“Specifically, the movement in UST yields (long-tenor) has been leading in DMs. We have long argued that higher interest rates are a key part of the new regime, as supply constraints may make inflation persistent, while bond supply is swelling due to high deficits, and macro and geopolitical volatility abounds. The US 10-year yield curve has continued to steepen at one of the fastest paces over the past decade, with UST 10Y now crossing the 2007 peak by touching 5 per cent,” it addd.

Following weakness in the US stocks overnight, stocks in Asia-Pacific region are down between 0.4 per cent and 1.3 per cent.

Analysts advise investors to remain cautious, as foreign portfolio investors are unlikely return as buyers anytime soon. Till such time, domestic markets will experience volatility, they added.

In the NSE derivative market, the highest Call open interest has moved lower to 19,800 strike, while on the downside the highest Put Ol is at 19,500 for the monthly expiry, indicating the Nifty movement, they further said.