Shillong, November 15: The October US inflation figures, revealing a 3.2% print that is lower than anticipated, are reshaping the stock market landscape, according to V.K. Vijayakumar, Chief Investment Strategist at Geojit Financial Services.
Notably, the modest 0.2% month-on-month increase in core inflation is seen as highly favorable.
As per IANS, Vijayakumar suggests that these numbers indicate the Federal Reserve’s conclusion on rate hikes, with a potential advancement of the timeline for rate cuts in 2024. He anticipates a robust recovery in US markets, which will likely have a positive ripple effect on the Indian market.
The prospect of short covering adding to the rally is highlighted, with Foreign Institutional Investors (FIIs) expected to become buyers to avoid missing out on the upswing in the world’s best-performing large economy. Financials, previously burdened by FII selling, are predicted to rebound.
Furthermore, the decline in Consumer Price Index (CPI) inflation in India is viewed as a favorable factor, contributing to a broad rally across sectors. Financials, automobiles, real estate, cement, and digital platform companies are expected to attract investments from Domestic Institutional Investors (DIIs), High Net Worth Individuals (HNIs), and retail investors.
The current market trend, favoring DIIs in the tug of war between FIIs and DIIs, reinforces the positive outlook. As of Wednesday, the BSE Sensex has surged by 593 points, reaching 65,527 points. IT heavyweights, including Tech Mahindra, Wipro, and Infosys, have experienced notable gains, with Tech Mahindra leading with a three percent increase and the others up almost two percent.