Market Outlook 12 May 2022

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12 May 2022

Market Outlook

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US stocks fell on Wednesday post inflation data that came slightly lower than previous read at 8.30% but was higher than expectations of 8.10%. Stocks fell dialing back earlier gains as investors continued to digest the latest US inflation data.
Dow Jones fell 1.02%, S&P 500 slipped 1.65% and Nasdaq dropped 3.18%. The current fall has taken S&P close to bear market territory as it has fallen 18% from peak while Nasdaq traded deep into bear market zone.

US dollar index is trading higher at 103.98 and is about to break 17 year resistance zone near 104. 10 year cooled off near 2.92% and Cboe Vix declined marginally near 32 (but still trading at elevated levels way above comfort zone of sub 20).

Crude futures continued to trade higher, WTI moved near 106, Brent near 108.

Indian stocks continued to trade down ignoring positive cues from global markets. Indices traded with cuts above 1.00% in overall sell-off intra-day but pared part of the losses towards closing hours on some recovery in banking names, IT, Nbfcs. Metals and Autos remained drag on the markets. Nifty ended the day below 16200, Sensex managed to close just above 54000.

The weak overnight cues from US markets may lead to further weakness in Indian stocks at open and weekly options expiry may lead to further volatility in individual names. Nifty may once again break psychological level of 16000 and may look at some support near 2022 low of 15671. Participants may continue to watch out for some base building for dead cat bounce / counter trend rally (though that remains elusive) for the near term. The short term trend though remains challenging as the global reset on growth-inflation dynamics and Central bank actions on inflation may continue to remain drag on the stocks.

(all prices mentioned above are as on 5.06 am IST)

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