Indian Markets Open Flat as Investors Await October CPI Inflation Data

Indian stocks are likely to open on a flat to negative note on Thursday, reflecting a cautious sentiment across the market. The Gift Nifty, trading at 25,240, signals a flattish opening for the Nifty index. The primary focus for domestic markets has shifted to India's inflation numbers following the recent announcement that US inflation rose sharply.

According to Ponmudi R, CEO of Enrich Money, domestic equity markets are expected to open on a steady note as investors keep a close watch on the October CPI inflation data scheduled for release later today. He noted that inflation remains the key domestic catalyst, particularly following the recent acceleration in price pressures and the Reserve Bank of India's shift towards a calibrated tightening stance after its October rate hike. A higher-than-expected October print could reinforce concerns over further monetary tightening, while a softer reading may offer some relief to market sentiment.

Hariselvan Radhakrishnan, Founder & CEO of HST Wealth, pointed out that while lower crude oil prices continue to provide a supportive backdrop, the US 10-year Treasury yield hovering near 4.99% and the market’s extended rally may restrict immediate upside. Brent crude trading near $92 a barrel reflects growing expectations of a de-escalation in US-Iran tensions and improving energy flows through the Strait of Hormuz. While the decline eases pressure on India's macroeconomic outlook and corporate earnings, the benefits will likely depend on whether lower prices are sustained.

Radhakrishnan added that although global markets recovered overnight led by technology shares, hotter-than-expected US inflation has strengthened expectations of another Federal Reserve rate increase. If US Treasury yields remain near or above 5%, foreign investors may adopt a more selective approach towards Indian equities despite the sharp retreat in crude oil prices.

In its technical outlook, Angel One noted that while the new Samvat 2083 began on a positive note, buyers failed to sustain higher levels after a gap-up opening, allowing sellers to gain the upper hand. Prices came under sustained selling pressure shortly after the opening bell, erasing the entire opening gap and dragging the index lower.

Angel One highlighted that following a sharp 3,000-point rally over the past two weeks, which resulted in a complete retracement of more than 100% of the preceding downswing, bulls appear to have taken firm control of the frontline Nifty index. However, the relentless upmove has pushed nearly all technical and market-breadth indicators into overbought territory, suggesting that the rally may be approaching a short-term point of exhaustion.

Looking ahead, while the underlying trend remains bullish, the firm cautioned that a short-term consolidation or corrective decline cannot be ruled out. Market participants have been advised to avoid chasing ongoing momentum and instead consider initiating fresh long positions on dips towards well-defined support zones where the risk-reward proposition is more favorable.

"The current market caution highlights the close correlation between domestic macroeconomic indicators, such as the upcoming CPI inflation data, and global monetary policy trends. For businesses, founders, and investors navigating the current economic environment, it is crucial to maintain disciplined capital allocation. Volatility driven by global yields and domestic inflation prints means that short-term corrections should be anticipated, making risk management a priority over momentum chasing." — Dr. Shishir Gupta, Founder & CEO, StartupLanes