Post Market views - March 15, 2022 - Reliance Securities

Mr Mitul Shah, Head Of Research at Reliance Securities.

Domestic markets closed lower as investors await on a resolution to the ongoing Russian-Ukraine conflict. The EU imposed a fourth round of sanctions against Russia and as investors remain wary on the outcome of the US Fed policy meeting. Moreover, February's retail inflation in India stood at 6.07 per cent, as against RBI's poll estimate of 5.93 per cent, which also impacted the market sentiments. Nifty decreased by 1.4%. Nifty MidCap and Nifty SmallCap were down by 1% and 1.5% respectively. Most sectoral indices ended in red except Nifty Auto (+0.4%) and Nifty FMCG (+0.2%). Nifty Metal declined the most at 4.2% followed by Nifty IT (-2.7%) and Nifty Media (-2.2%).

Majority of U.S equities ended lower as investors rely on the diplomatic talks between Russia and Ukraine, ahead of Wednesday's decision from the Federal Reserve to raise interest rates. The Dow Jones Industrial Average ended flat. The S&P 500 lost 0.74% while the Nasdaq Composite dropped 2.04% due to sell-offs in major tech stocks. The yield on 10-year Treasuries was at 2.13%. While there was a decline in oil prices initially, the market is still prone to sell-offs as macroeconomic uncertainty still remains. Moreover, investors await on the central bank's decision to raise interest rates as inflationary pressures continue to affect the economy. However, a very aggressive rate hike could lead to a slower economic growth.

Volatility in financial markets should continue due to the Russia-Ukraine crisis. Moreover, trend in global equities, the movement of rupee against the dollar and crude oil prices could dictate the near-term trends. 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. This coupled with increasing DII participation can revive the markets gradually once prevailing clouds of uncertainty disappear.

Source : Equity Bulls

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