Sensex, Nifty braced for weak opening as global markets remain unsteady

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Domestic markets are expected to open on a weak note on Wednesday as well, amid a lack of clear positive cues. The rebound attempt in Nifty on Tuesday showed that bulls are not in the mood to loosen their grip easily, and supportive global cues could prompt the next leg of the up move, said Ajit Mishra, SVP – Technical Research, Religare Broking Ltd.

Analysts said the global markets are struggling for direction, led by the US stocks.

Kyle Rodda, Senior Market Analyst, Capital.com, said: Equity valuations have been juiced by expectations for relatively aggressive interest rate cuts this year. The so-called Powell pivot, combined with a trend of softer-than-expected inflation data, has materially loosened financial conditions and boosted market multiples. “Despite some pushback from Fed officials – which screams, “We kicked our own goal by flagging rate cuts in 2024” – and solid labour market data, imminent and aggressive rate cuts are still baked-in and underpinning stock indices,” he said.

Besides, the focus will also be on quarterly results. Thursday, prominent and big companies such as Infosys, Tata Consultancy Services, HDFC Asset Management, and 5Paisa will release their results on December 11.

In a Q3 preview, YES Securities said Topline growth is seen at 8.8 per cent y/y, reflecting a slight pick-up compared to the previous two quarters. This can be attributed to a rebound in economic activity. EBITDA margins are likely to expand by 186bps y/y basis, touching 19.4 per cent, the best seen in the past seven quarters; however, sequentially, the number is growing by a mere 4bps. PAT growth of 27 per cent y/y basis is the strongest in the last eight quarters.

Gift Nifty at 21,578 against Nifty futures of 21,616.85 signals a downward bias. But for Japanese markets, equities across the Asia-Pacific region are down around 0.5 per cent. The US stocks closed mixed, displaying a lack of clear direction. The Nasdaq ended higher, while the Dow Jones and S&P-500 closed in the red.

He cautioned that the markets could be on the path of immaculate disinflation to an economic soft landing. The Fed is projecting as much. “However, the central bank thinks that this scenario will only require around three rate cuts, and that’s only to keep policy moving in line with reductions in annual inflation to keep “real” rates steady. Again, it looks like something needs to give, which means that the markets could hit a pocket of volatility at some point before a more sustained uptrend can be established,” Kyle Rodda said.

Participants should limit trades and prefer hedged bets, said Ajit Mishra.