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Quote On Morning Market 16 August 2023 By Dr. V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services

"There are strong headwinds, both globally and domestically, that can impact the market in the near-term. Global headwinds are from the rising dollar index ( 103.23) and spiking U.S. bond yields ( 10-year yield 4.21%). Consequently FIIs are selling, taking their cash market sell figure in August, till 15th, to Rs 9867 crores. Domestically, the major headwind is the rising inflation. July CPI inflation has come at 7.44%, which is 1% above consensus estimates. The CPI inflation for FY 24 will have to be revised upwards to 5.6%. The takeaway from this is that a rate cut can be expected only in H2 of CY24. This is negative for rate sensitives. So, banking sector, which has been a pressure point for the Nifty is likely to experience more near-term pain. But for long-term investors, the correction can be an opportunity since the sector is doing well and valuations are fair. 

Defensives like pharmaceuticals and IT will be relatively safe in the near-term. Rupee will turn weak."

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