Sensex may react to US volatility today

The equity market may continue to be highly volatile on Friday as it opens post-holiday on Thursday, tracking volatile global markets, domestic macroeconomic data and grim Covid situation.

Asian and European markets tumbled on Thursday on rising inflation and soaring global commodity prices.

Japan’s Nikkei index was down 2.49 per cent, China’s Shanghai Composite was down 0.96 per cent and Hong Kong’s Hang Seng 1.81 per cent following the biggest fall in the US stock market since February.

The US market fell sharply on Wednesday after inflation data released showed the biggest jump in inflation since September 2008 as consumer prices jumped 4.2 per cent in April, up from 2.6 per cent in March. However, better US job data released on Thursday led to a recovery in the US market in early trade.

Fearing a rise in interest rates, technology index

Nasdaq fell 2.67 per cent, SP 500 fell 2.1 per cent and Dow Jones fell 1.99 per cent on Wednesday.

Along with the US market developments, escalation of war between Israel and Palestine and grim Covid situation back home are likely to impact stock price movement in the domestic market. Around 83 people were killed and 480 wounded in the fierce fight between Israel and Palestine forces.

CPI inflation moderated to 4.3 per cent y-o-y in April versus 5.5 per cent, largely as a consequence of favourable base effects and thus could rise in coming months.

“Upcoming inflation prints may shoot up to above 5.2 per cent led by higher fuel cost and select perishable and non-perishable food inflation and sticky core inflation,” said analysts from Emkay Global Financial Services.

Industrial production growth picked up sharply to 22.4 per cent year on year in March from minus 3.4 per cent in February 2021 but could again get impacted negatively due to the lockdown effect.