Market Ahead Podcast, Oct 7: Top factors that could guide markets today

Nervousness in the global markets, along with weekly F&O expiry, will likely keep the markets volatile on Thursday.

That apart, stock-specific action, foreign fund flow, and the rupee’s movement will also guide the market trajectory.

On Wednesday, equity benchmark Sensex plunged 555 points following losses in index majors Reliance Industries, Infosys and ICICI Bank amid a selloff in global markets.

The 30-share BSE Sensex index ended 0.93 per cent lower at 59,190. Similarly, the broader NSE Nifty tumbled 176 points or 0.99 per cent to 17,646.

US crude rose 0.24% to $79.11 a barrel, its highest level since 2014, while Brent crude neared $83 per barrel.

Given that oil inventories are already low, analysts fear OPEC's outlook could mean further reductions in global oil stockpiles.

Additionally, Natural gas futures in New York jumped to the highest settlement price in 12 years while those in the Dutch and UK gas futures have jumped 60% in just two days, hitting fresh records, amid supply crunch.

These worries are weighing on equity markets, with investors concerned that higher energy prices could force central banks to raise rates.

Remember, the RBI has commenced its three-day MPC meeting in which the central bank is expected to keep rates unchanged. However, it is likely to announce measures to gradually pump out liquidity from the economy, which is also affecting market mood.

According to Vinod Nair, head of research at Geojit Financial Services, rising energy prices will have a negative impact on Indian listed companies which depend on energy-related inputs like crude, gas & coal.

Investors, he says, should avoid this space in the short term due to high global volatility and uncertainty on the Indian economy. On a medium to long-term basis, however, market participants can buy into sectors like Gas, Pipe Lines & Green Energy companies due to positive government reforms and plan to reform the power sector.

S Hariharan, Head- Sales Trading at Emkay Global Financial Services, meanwhile, says that should global central banks respond to rising inflation expectations by paring bond purchases and tightening monetary conditions; it could act as a trigger for sudden re-pricing of risk assets across the board.