The stock market is expected to open lower on Wednesday despite rebounding towards the close on the previous day. The Asian markets had opened lower while the Wall Street equities dropped after the US inflation data hinted at further delays in Federal Reserve Rate cuts.
On Tuesday, the Bombay Stock Exchange benchmark Sensex had jumped nearly 500 points while the National Stock Exchange index Nifty had ended above the 21,700 level at close.
“The domestic market largely recovered from yesterday’s losses, driven by gains in the banking sector. Improved sentiment stemmed from a decline in domestic inflation, which is expected to boost rural demand,” Vinod Nair, Head of Research, Geojit Financial Services, had told PTI.
Both Nifty 50 and Sensex had witnessed a volatile start to the week, losing about 0.75 per cent on Monday. Both the indexes gained 0.5 per cent each on Tuesday to recover some of the losses.
“Although markets ended with gains on Tuesday, it was mainly due to recovery in banking stocks which were hammered in recent sessions due to mixed earnings in financials and central banks hinting at delay in rate cuts,” Prashant Tapse, senior vice president of research at Mehta Equities, told Reuters.
On Tuesday, the US Department of Labour data showed that the consumer price index rose 3.1 per cent from a year ago last month, down from 3.4 per cent in December.
“At a time when growth and employment remain strong, inflation declined by two thirds from its peak,” US President Joe Biden said in a statement.
Asian equities sank, tracking a sell-off on Wall Street, following the US inflation data. The dimming prospects of a dovish turn by the Federal Reserve also sent the dollar surging against the yen, forcing Japanese officials to warn they would intervene in forex markets to support the country’s currency.