InvestorQ : How do you see the markets panning out on Wednesday, 12th October 2022?
Archita Jajjoo made post

How do you see the markets panning out on Wednesday, 12th October 2022?

diksha shah answered.
2 months ago

It was a weak trading day on Tuesday as the Nifty fell by over 257 points on Tuesday forcing the Nifty to settle below the psychological 17,000 levels. Markets were weak ahead of macro data and IT sector results. The global upcoming cues like Fed minutes and US inflation also played on the market sentiments and kept the markets under pressure.

In terms of sectoral trends, most of the major sectors like metals, banks, pharma and auto stocks came under pressure on Tuesday on account of paring of positions. In fact, there were just a handful of gainers like Axis Bank and Adani Enterprises. The advance decline ratio was extremely unfavourable at 3:47 with deep cuts in mid-caps and small caps.

The pressure of FPI selling continued as foreign investors were net sellers in equities to the tune of Rs.4,613 crore even as domestic funds and LIC bought stocks worth Rs.2,431 crore on Tuesday. FPIs started the month of October 2022 on a positive note, but have once again turned net sellers to the tune of Rs2,300 crore till date.

On Tuesday, the Dow gained 36 points and NASDAQ was down 116 points as tech stocks came under pressure ahead of the inflation numbers and the announcement of the Fed minutes. The SGX Nifty is up by 20 points in early trades on Wednesday but may not sustain as Europe and Asia are under pressure and that is likely to rub off.

The current week is likely to be a very tricky week with a slew of data points expected. Markets are reconciled to another 75 bps rate hike by the Fed in November followed by another 50 bps by the RBI in December. Higher rates and rising bond yields are likely to make the equity earnings yields less attractive and depress the PE ratios of equities. That would obviously make bonds look more attractive. Focus should still be on domestic plays like FMCG and autos while global plays like IT and metals are best avoided.