Inflation, IIP data, Fed action likely to keep markets under pressure  

NEW DELHI:  India’s equity market snapped a three-day losing streak and gained little less than 1% on Wednesday on the back of short-covering by traders ahead of the expiry weekly options trading session.  
The BSE Sensex ended 479 points higher at 57,626 on Wednesday, while the NSE Nifty 50 closed 140 points higher at 17,124. Among the Sensex pack, PowerGrid Corporation, NTPC and Axis Bank rose between 2.5-3.5%.

Market experts, however, are not very confident of a bull run in the ongoing festive season. External headwinds such as an expected Fed rate hike, volatile crude prices, strengthening of dollar index and bond yields, and domestic factors such as lowering of GDP target, high inflation and falling industrial output data is expected to weigh on investors’ sentiments.

“While both CPI and IIP numbers have come in worse than expected, markets would be more impacted by the IIP number as the actual numbers are far worse than expected and such a number could cloud the GDP estimates for FY23, if we don’t see a quick recovery soon,” said Deepak Jasani, head of retail research, HDFC Securities.

The consumer price index (CPI), or the retail inflation, shot up to 7.41% in September,  while factory output - the Index of Industrial Production (IIP) - fell to an 18-month low of 0.8% in August from 2.2% in July, data released by the National Statistical Office showed on Wednesday.

“With September retail inflation rising to 7.41%, the RBI has a major challenge ahead. The Monetary policy committee will have to continue raising rates, most likely by 50 bp in the next meeting, and this will adversely impact economic growth which is already showing signs of deceleration,” said VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services.