Can you tell me your outlook for stock markets for Wednesday 18th May, 2022?

Trading on 18th May was marked by contrasting trends. On the one hand, the Nifty was up by 417 points but on the other hand, the LIC listing was extremely tepid as the stock closed 8% below the issue price. There was apparently a lot of selling from HNIs and institutions in the counter, as the discount was too steep for their liking.

On Tuesday, the Nifty had an absolutely fantastic advance decline ratio of 50:00 with not a single stock in the negative for the day. The big gainers were the metal stocks which continued to be in favour on hopes of a Chinese revival. However, smaller stocks are under a lot of pressure. Meanwhile, VIX tapered sharply on Tuesday to 22.74 levels but still high.

Foreign investors net sold equities worth Rs.2,192 crore as domestic funds bought Rs.2,294 crore of stocks on Tuesday. The selling was quite sharp among HNIs on first day of LIC. In global markets, Dow was up 431 points while NASDAQ gained 322 points. European markets were up more than 1% while SGX Nifty is trading negative in early trades on Wednesday.

On Tuesday, Jerome Powell, speaking at the WSJ Conference hinted that rates could go as high as 4% instead of the originally indicated 3%, if inflation did not come under control. The macros and the news flows are not too positive, so it is best to remain cautious. More so in the light of the working capital pressure seen by Indian corporates in fourth quarter.