Sensex has opened higher in line with other Asian markets

China's macro data has also boosted investor sentiments

Dipanwita Mazumdar

Economist,

Bank of Baroda 

Mumbai, November 15, 2023: Softening CPI print in the US (flat sequential increase against 0.4% increase in Sep’23) provided some degree of comfort to markets. Even CPI excl. food and energy also moderated to 0.2% from 0.3%. On YoY basis, CPI and core came in at 3.2 and 4% respectively. This has raised bets for Fed fund rate to be on the same level as of now in the next meeting (94.5% probability against 85.5% a day before). Separately, in China, major high frequency macro indicators showed some momentum. Industrial production rose by 4.6% against expectation of 4.5% in Oct’23, on YoY basis. Retail sales rose by 7.6% (est.: 7%). In Japan, sharp contraction is visible in Q3 provisional GDP estimate as private consumption demand flat lined. On domestic front, WPI remained in deflation territory for 7th consecutive month.

• Barring Hang Seng, other global indices closed higher. Major rally in US and Europe was supported by cooler than expected US CPI print for Oct’23. With this, it is widely anticipated that Fed’s rate hiking cycle has come to an end. Markets in India were closed for Diwali. Today, Sensex has opened higher in line with other Asian markets. Better than expected China’s macro data (retail sales, industrial production) has also boosted investor sentiments.
• Except INR (closed), other global currencies ended higher. DXY fell by 1.5%, driven by sharp drop in US sovereign yields, as inflation softened more than estimated. Further, supported by improvement in risk sentiment, Asian currencies, including INR, are trading higher today.
• Global yields closed lower. Moderation in CPI print in the US raised bets that Fed is done with the rate hike cycle. US 10Y yield fell at the sharpest pace followed by UK and Germany. Even a comforting Zew sentiment data in Germany could not arrest the fall in its yield. India’s 10Y yield fell by 2bps. It is trading flat today.

(The views expressed in this research note are personal views of the author(s) and do not necessarily reflect the views of Bank of Baroda. Nothing contained in this publication shall constitute or be deemed to constitute an offer to sell/ purchase or as an invitation or solicitation to do so for any securities of any entity.)