Market at new high, Nifty 18,000 . closed over

Shares in other Asia-Pacific region markets, mainly mainland China and Korea, rose 0.4-1%. Business in Hong Kong was canceled due to a storm warning warning.

Vinod Nair, Head of Research, Geojit Financial Services, said, “Global market sentiment is muted on inflationary fears and higher bond yields ahead of the release of US inflation data. However, Indian markets remain strong due to the festive season.”

Analysts also said the strong macro-economic recovery in India has boosted confidence about equities. September’s retail inflation further fell to 4.3% (from 5.3%), while August IIP expanded year-on-year to 11.9%, a marginal rise from 11.5% YoY in July.

“Going forward, while the festive season and unlocking benefits may support demand in the near term; Export Outlook remains the key to Outlook. Accordingly, a moderation in the pace of global growth and supply disruptions could be a downside in the short term,” Edelweiss Securities said.

Analysts at Edelweiss Securities expect the Reserve Bank of India to maintain a lenient stance to support growth, especially as fiscal impulses are waning and economic recovery remains uneven. It said, “An attempt by the RBI to contain any supply-led increase in inflation will prove fruitless and will instead begin to impact economic growth.”

Even as Indian markets are rising, foreign institutional investors (FIIs) inflows into equities declined to $100.6 million in October from $1.13 billion in the previous month. Domestic institutional investors, including mutual funds and insurance companies, have invested ₹2471.69 crore in the month to date ₹7236.72 crore in September.

According to analysts at Credit Suisse Wealth Management, cost pressures in India could be reflected in corporate earnings in the next few quarters due to higher commodity prices and rising shipping/freight costs. They continue to be neutral on equities and prefer to focus on companies that are less sensitive to rising cost cost pressures and are likely to benefit from the reopening of the economy.

“Even in the near term, as inflationary pressures increase, a shift from bonds to equities could help buy interest in equities, although in select sectors that thrive in an inflationary environment or input cost pressures and supply chains.” are less vulnerable to disruptions,” said Jitendra Gohil and Premal Kamdar, analysts, Credit Suisse Wealth Management, India.