Post Market views - March 3, 2022 - Reliance Securities

Mr Mitul Shah, Head Of Research at Reliance Securities.

omestic equity markets closed lower as the geopolitical scenario continues to worsens due to the Russia-Ukraine crisis. Soaring crude prices due to supply disruptions from Russian sanctions have further escalated the situation. Nifty decreased by 0.6%. Nifty MidCap and Nifty SmallCap was down by 0.8% and 0.4% respectively. Most sectoral indices ended in red except Nifty Media (+0.4%), Nifty IT (+1.2%) and Nifty Metal (+1.1%). Nifty Auto decreased the most at 2.3% followed by Nifty Bank (-1.2%) and Nifty Fin Service (-1.1%).

Despite global concerns, US equities ended sharply higher after Federal Reserve Chair, Powell indicated that the central bank would likely raise interest rates less than investors had anticipated earlier. The S&P 500 gained 1.84% while the Nasdaq gained 1.61%. The Dow Jones rose 1.78%. The yield on 10-year Treasuries advanced 18 basis points to 1.9%. Federal Reserve supports increasing short-term interest rates by 25 bps in the next policy meeting on March 15 and 16. Russia's week-old invasion has yet to achieve its aim of overthrowing Ukraine's government. Ukrainians said they were battling on in the port of Kherson, the first sizeable city Russia claimed to have seized, while air strikes and bombardment caused further devastation in other cities.

he European Union wants to cut all links between Russia and the global financial system. The madness seen last week may have subsided, but the participants are still having anxiety attacks over the Ukraine issue. The average downside in Indian market is 16-17% in past few wars, while recovery was 23% in 3 months and 34% in 6 months. Now in Russia-Ukrain War, NIFTY is down 11% from its peak of ~18,600. Even if we assume market recover by 20% by end of December 2022, we will get our year-end target of 20,000 on Nifty, which is based on 22x FY24 earnings.

Source : Equity Bulls

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