Post Market views - Dec 15, 2021 - Mr Mitul Shah, Head Of Research at Reliance Securities

The market witnessed profit selling after positive opening and trading in a narrow range with Nifty-50 is down ~0.5%. The negative sentiments from other Asian markets due to renewed concerns about new variant restricted fresh buying. Moreover inflationary pressure in major economies is key concern in recent times. The broader market outperformed the main indices, Nifty Small cap is up 0.4%. Sectors like Nifty Auto and Bank is trading in green, while Realty and IT is in red. The Union Cabinet cleared the PLI for semiconductors with the ambition of making the India an electronics hub as the shortage of microchips hurts industrial production. The government proposes to provide incentives worth Rs76,000 crore for semiconductor production over the next six years. The scheme will include provision for 25% incentives on capex for establishing unit of Compound Semiconductor Wafer Fabrication, assembly, testing, and packaging facility. This News is taken positively by few key interested players and investors.

Markets are anticipating that Federal Reserve policy makers will announce a faster pace of tapering response to rising prices, and will do enough rate hikes to take their main policy rate target to 2.5% by the end of 2024. This week brings a flurry of other central-bank decisions, including Bank of England, the European Central Bank and the Bank of Japan. In addition, markets will be focused on coronavirus headlines. The government's focus is clearly on supporting growth through sufficient liquidity and low interest rates despite street fears over rising inflation, changes in interest rate policy by global economies and high commodity prices. However, India is at the beginning of capex revival phase and therefore corporate earnings recovery looks sustainable and premium valuations might sustain, barring near term hiccups.

Source : Equity Bulls

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