Inflation remains the biggest challenge for equities across the globe, especially with Brent crude hovering around the US$120 a barrel mark. RBI deputy governor Subir Gokarn and PMEAC chief C Rangarajan have warned about risks to growth from elevated inflation. The RBI does favour inflation control to higher growth. So, further rate hikes cannot be ruled out over the next few months.
Meanwhile, the Chinese central bank has hiked lending as well as deposit rates by 25bps to rein in inflation. The ECB is likely to resume monetary tightening later this week for the first time since the global fiscal meltdown of 2008. Even in the US, the Fed policymakers have kicked off the debate on when to exit from the stimulus.
We expect a steady opening as world markets are putting up commendable resilience amid a string of headwinds. Though the undertone for India is positive owing to encouraging FII inflows, we could see some consolidation in the near-term. The Nifty may stay rangebound; a breakout above 5960 or breakdown below 5,840 will decide the near-term direction.
