Sensex plunges over 600 points as US inflation data concerns investors

By:
on Feb 14, 2024
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  • The BSE Sensex plunged by 614.75 points to 70,940.44
  • NSE Nifty fell 170.45 points, falling to 21,572.80 during early trade hours.
  • US Consumer Price Index data increased by 0.3 percent on a monthly basis.

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Indian shares faced a downturn on Wednesday as they mirrored losses in Asian markets, prompted by higher-than-expected inflation figures from the United States. The BSE Sensex plunged by 614.75 points to 70,940.44, while the NSE Nifty experienced a drop of 170.45 points, falling to 21,572.80 during early trade hours.

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Deepak Jasani from HDFC Securities identified a bullish trend in Nifty’s candlestick pattern but urged caution below the 21543 mark.

Conversely, Avdhut Bagkar of StoxBox anticipated a sharp decline in Indian markets, particularly emphasizing scrutiny on Adani Group stocks following a Moody’s upgrade.

Shrikant Chouhan of Kotak Securities proposed a Nifty buying strategy, highlighting support at 21450 and underlining resistance levels. Notably, profit booking was observed in small- and mid-cap stocks, while Foreign Portfolio Investors (FPIs) divested Rs 2,524 crore in February, counterbalanced by continued buying streaks from Domestic Institutional Investors (DIIs).

Global economic indicators

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In the United States, Consumer Price Index (CPI) data increased by 0.3 percent on a monthly basis and 3.1 percent annually, surpassing analysts’ expectations of 0.2 percent and 2.9 percent, respectively.

This uptick in inflation contributed to a 2.6 percent rise in the US 10-year bond yield and a 0.6 percent surge in the US Dollar index. Correspondingly, the Dow Jones Industrial Average and S&P 500 witnessed declines of 1.11 percent and 1.29 percent, respectively.

Analysts caution that the escalation in US bond yields and the Dollar index presents challenges for emerging markets like India, with an anticipated negative sentiment persisting over the next 2-3 trading sessions. However, some experts believe the impact on Indian markets will be temporary, awaiting further US economic data such as Personal Consumption Expenditure (PCE) data and employment figures.

Outlook

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Siddharth Bhamre maintains confidence in the resilience of the Indian market, suggesting that a single data point won’t significantly alter the medium-term outlook, especially given the positive trajectory of US employment figures. Amit Goel echoes this sentiment, forecasting a short-term impact lasting 2-3 sessions, with market sentiment hinging on Nvidia’s upcoming quarterly earnings on February 21, particularly significant due to its association with the AI theme driving the current rally.

As global economic indicators continue to influence market sentiment, Indian investors remain vigilant amidst concerns over inflation and interest rate dynamics. While short-term volatility may persist, experts express optimism regarding the market’s resilience in the face of evolving economic conditions, underlining the importance of forthcoming data points and corporate earnings releases in shaping future market trends.

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