Post Market views - March 8, 2022 - Reliance Securities

Mr Mitul Shah, Head Of Research at Reliance Securities.

Domestic equity markets closed higher despite Russia and Ukraine's failure to reach a deal on creating "humanitarian corridors" as bloodshed from Russia's invasion increased. Nifty increased by 0.95%. Nifty MidCap and Nifty SmallCap were up by 1.2% and 1.5% respectively. Most sectoral indices ended in green except Nifty Metal (-1.5%). Nifty Reality increased the most at 3.3% followed by Nifty PSU Bank (+2.6%) and Nifty IT (+2.7%).

U.S equities tumbled as Investors continued to sell off stocks and stockpile safe-haven assets as concerns over the economic consequences of Russia's war in Ukraine intensified. Bombardment of Ukrainian cities continued as low-level negotiators from both sides meet for a third round of talks on Monday. Moreover, ongoing discussion on sanction of Russian Oil by US created higher level of fear for equity markets, leading bigger fall yesterday. The Dow Jones fell 2.4%, while the S&P 500 lost 2.95%. The tech-heavy Nasdaq slumped 3.6%. The 10-year Treasury yield rose to 1.75%. The geopolitical turmoil is expected to impact the Federal Reserve from an aggressive interest rates hike. Investors had previously considered the possibility of a 50 basis point rate hike. However, Fed Chair Jerome Powell signalled a 0.25% hike at the Fed's policy meeting on March 15 and 16.

Market may remain volatile due to the Russia-Ukraine crisis. Trend in global equities, the movement of rupee against the dollar and crude oil prices will dictate trend in the near term. The Indian economy is in good shape given the underlying stellar corporate earnings momentum, the cleansed balance sheets, improving asset quality of the banks, levers in place for capex cycle revival and credit off-take, probable manufacturing resurgence given PLI and other government reforms. This coupled with increasing DII participation can revive the markets gradually once prevailing clouds of uncertainty disappear. However, over near term war issue would have high negative bearings on global equity markets including Indian equities.

Source : Equity Bulls

Keywords

PostMarketViews RelianceSecurities NiftyMidCap NiftySmallCap Realty PSUBank IT