Weak global cues set tone for Sensex, Nifty with expected gap-down opening

Domestic markets are likely to see a strong gap-down opening on Friday amid weak global cues. The US Stocks overnight slumped sharply on healthy job data. Major US indices crashed led by Nasdaq that slumped nearly 2 per cent. S&P 500 and the Dow Jones Industrial Average lost over one per cent.

Gift Nifty at 19.300 signals, a gap down opening of over 100 points for Nifty, as focus now shifts to Fed meet. Most equities across Asia-Pacific region are also in deep red.

According to analysts, global investors await signals from Jackson Hole summit.

Riches Vanara, Technical And Derivatives Analyst, StoxBox, said: “Commencing today, our focus will remain on the economic symposium in Jackson Hole which will feature meetings by global central bank leaders as well as a speech by Federal Reserve Chair Jerome Powell due tomorrow to get further direction on the outlook for interest rates trajectory.”

Siddhartha Khemka, Head – Retail Research, Motilal Oswal Financial Services Ltd, said: All eyes would be on the outcome of the Jackson Hole meeting, which would provide some direction on interest rates going forward. 

Meanwhile, the minutes of RBI monetary policy were released on Thursday.

Madhavi Arora of Emkay Global Financial said, The August MPC meeting minutes have traces of caution, but are not ominous enough to change the overall narrative. “The choice of policy flexibility, vigilance, and focus on the durable elements of inflation dominated the minutes. There was divergence in views around inflationary risks and the second round impact of the ongoing food price spike, although members were unanimous on citing the need for supply-side reforms to reduce the frequency and impact of such spikes. The current repo rate level was seen as appropriate, given risks to growth and inflation. The surge in system liquidity was mentioned as posing a risk to the inflation outlook, with the I-CRR action aimed at draining this. Going ahead, the RBI will stay vigilant, but there will be no urgency to act unless food inflation becomes generalised, and it is unlikely to precede the Fed in any policy reversal in CY24,” she added.

Thursday’s institutional activity shows a strong buying both domestic and foreign portfolio investors. However, the heightened activity was mainly due to a host block deals involving stocks such as Coforge, Max Financial Sapphire and Manappuram.

According to analysts, FPIs will remain cautious in the next few weeks given the global headwinds, they added.