Sensex reverses losses, gains over 75 points in early trade

Indian equity benchmarks started the week on a cautious note after a dramatic rally on Friday, as investors reviewed and repositioned ahead of domestic inflation and earnings showered amid improved market risk sentiment.

In a volatile trading session early on Monday, the BSE Sensex index rose 76.82 points to 61,871.86 and the broader NSE Nifty gained 0.21 per cent to 18,387.35.

Both the benchmark indices extended their rally from Friday, when they touched 52-week highs.

Nevertheless, domestic retail inflation data, out after trading hours, is likely to keep the markets under control during today’s session, despite widespread optimism for global risk assets.

Also, more than a thousand companies are expected to release their earnings later. Low-cost airline SpiceJet, pharmaceutical company Biocon, tire maker Apollo Tyres, conglomerate Godrej Industries and Grasim Industries, and others are among them.

Hemant Kaanawala, Head of Equity, Kotak Mahindra Life Insurance, said, “The market is holding well due to strong earnings despite a weak global backdrop. However, peak range valuations continue to be a headwind, thus limiting the market in the near future. Is.”

Last week, lower-than-expected US inflation data for October prompted a dramatic reassessment of the Federal Reserve’s policy course for the coming year, crashing the dollar and igniting a massive rally in equities, riskier assets and bonds. .

The Nasdaq rose 8 percent for the week, the two-year Treasury yield sank 30 basis points on Friday, its biggest drop since 2008, and dollar fell 4 percentThis is surprisingly the fourth biggest weekly decline since the period of freely floating exchange rates began 50 years ago.

But with investors still having one of the most dramatic weeks in recent market history, Asian markets opened relatively flat on Monday.

MSCI’s broadest index of Asia-Pacific equities outside Japan rose 0.2 per cent, after rising 7.7 per cent last week.

South Korea’s stock market rose 0.3 percent, while Japan’s Nikkei was unchanged. Nasdaq futures were down 0.3 percent, while S&P 500 futures fell 0.2 percent.

What didn’t help was remarks by Federal Reserve Governor Christopher Waller on Sunday that the US inflation data from last week was “just one data point” and that additional readings of a similar nature were needed to demonstrate that inflation was falling.

However, Mr Waller said the Fed may begin to consider hiking the slow.

Bruce Kassman, head of economic research at JPMorgan, told Reuters: “The CPI downside surprise aligns with a wide range of indicators pointing to a decline in global inflation, which could reduce the pace of monetary policy at the Fed and elsewhere.” should be encouraged to do so.” Reuters.

“This positive message needs to be tempered by the recognition that the decline in inflation will be too small for central banks to declare mission-accomplished, and more tightening is likely on the way.”

Traders will also watch to see if significant gains in Chinese stocks can continue after news that regulators urged banking institutions to provide additional support to struggling real estate developers.

Blue chips rose on Friday due to several COVID restriction amendments, even as China reported more cases over the weekend.

The week ahead is filled with the usual deluge of economic data, and as market participants recap, review and repost policy maker speeches.

Additionally, at the G20 summit in Bali on Monday, United States President Joe Biden and Chinese President Xi Jinping will meet face-to-face for the first time since taking over as US President.

It’s fair to say that relations between the two superpowers are chilly, so any sign of a thaw could add to the upbeat market mood that has been spreading since last week.