Shillong, August 16: V.K. Vijayakumar, Chief Investment Strategist at Geojit Financial Services, highlighted potential near-term challenges for the market, both globally and domestically.
As per IANS, the rising dollar index at 103.23 and surging U.S. bond yields constitute global headwinds, leading to Foreign Institutional Investors (FIIs) selling, with August’s cash market sell figure reaching Rs 9,867 crore.
Domestically, a major concern is escalating inflation, with July’s Consumer Price Index (CPI) inflation at 7.44%, surpassing consensus estimates by 1%. As a result, projections for FY’24 CPI inflation will likely be revised upward to 5.6%, implying the potential for a rate cut only in the second half of CY24.
This poses challenges for rate-sensitive sectors, particularly the banking sector, which has been a pressure point for the Nifty. However, long-term investors might view the correction as an opportunity, given the sector’s strong performance and fair valuations.
Defensive sectors like pharmaceuticals and IT are expected to remain relatively stable in the near term. The rupee is anticipated to weaken.
In morning trade, BSE Sensex experienced an 80-point decline, reaching 65,321 points on Wednesday.
