Nifty holds at 17,000 amid volatility

Indian markets were volatile again on Thursday after a day’s respite on Wednesday. Weak macroeconomic data with retail inflation climbing to a five-month high and industrial activity contracting for first time in 18 months were bound to be dampeners.The producer price index in the US increasing 0.4% for the month, higher than the expectation of 0.2%, was also not encouraging. The minutes of the US Federal Reserve’s last meeting in September also highlighted its continued focus on containing inflation.

The Nifty opened marginally weak and slipped below the 17,000 mark by noon on Thursday. However, it closed at 17,014.35 down 0.64%. The Sensex also closed down 0.68%

Volatility is likely to continue, according to experts.

“Retail inflation persisting above the desired levels has been a major cause of concern for the Indian economy. This, coupled with declining industrial production in August may not be taken well by the market because the economy is expected remain resilient. Against this backdrop, the impending US inflation figures, which are forecast to stay high, may cause volatility in the global market” said Vinod Nair, head of research at Geojit Financial Services. A weakening rupee and a spike in crude prices led by production cuts by the Organization of the Petroleum Exporting Countries remain key risks. Inflation numbers remain above acceptable limits of central banks, which can lead to continued rate hikes in the near term. BofA Securities have cut the Nifty target to 17,500 from 18,500 on weakening macros. In the near term, higher crude prices, slowing global growth, and a depreciating currency could create a downward spiral of macro risks, leading to a ballooning of the current account deficit, it said.