Nifty could gap up by 400 pts on overnight surge in US markets

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The Nifty could open gap up by as much as 400 points, cues from SGX Nifty signal, as the US markets surged overnight on inflation data, which turned out below expectations.

The SGX Nifty, which derives its value from the Nifty, traded up at 18,424.5 at 8:30 am IST while the Nifty closed at 18028.2, indicating a 396.5-point difference.

Asian markets too traded up as of writing. The Nikkei 225 was up 2.75% while Hang Seng traded up a whopping 5.3% and Kospi gained 3.3%.

The US Dow ended up 3.7% at 33,715 while the Nasdaq bounded 7% to 11,114 after the labor department data showed that core inflation, stripped of volatile energy and food prices, grew by 0.3% from the prior month against a 0.5% forecast by a Bloomberg poll of economists. Overall CPI inflation rose 7.7% in October from a year ago.

The moderation in the pace of inflation could influence the US FOMC’s future rate hike decisions. The US inflation is still way above the Fed target of 2%. The highest rate hikes in decades in the US to cool off 40-year high inflation has forced other central banks too to raise rates and most currencies have depreciated sharply against the dollar.

“Markets are ecstatic as any sign of tapering in inflation bodes well for financial markets,” said SK Joshi, ED Khambatta Securities.

The Nifty is trading 3.2% at CMP from its record high of 18,605.45 in October last year, with technology stocks bearing the brunt of the fall.

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