Daily Markets Wrap - April 8, 2022 - HDFC Securities

Mr. Deepak Jasani, Head of Retail Research, HDFC Securities

Nifty snapped a three day losing streak and ended higher after RBI's monetary policy committee has kept the key rates unchanged. Nifty remained rangebound in the morning till 1130 Hrs post which it took off on the upside. AT close, Nifty was up 0.82% or 144.8 points at 17784.3.

Volumes on the NSE were in line with recent averages. Among sectors Power, Oil & Gas, Metals and FMCG indices rose the most while IT ended marginally in the negative. BSE Smallcap and Midcap indices rose 0.93-0.99%.

Asia's major markets ended the week in positive territory after a tough few days taking leads from wall street. European equities rose snapping two days of declines sparked by the Federal Reserve's plan for aggressive monetary-policy tightening. Investors continued to digest the prospect of tighter monetary policy, more sanctions on Russia, and potential French political turmoil.

The Monetary Policy Committee of the Reserve Bank on April 8 kept the key interest rates unchanged and retained its accommodative stance but it made a slight shift on the liquidity front. It indicated a bit of hawkishness in its decision on gradual, calibrated withdrawal of liquidity over a multi-year time frame in a non-disruptive way.

Equity mutual funds in India attracted a net sum of Rs 28,463 crore in March, making it the 13th consecutive monthly net inflow, amid a volatile stock market environment and continued FPIs selling.

However, the debt segment saw a net outflow of Rs 1.15 lakh crore last month, after witnessing a net inflow of Rs 8,274 crore in February. Monthly contributions into systematic investment plans recovered to hit an all-time high of Rs 12,327.9 crore. This is the first time contributions have crossed Rs 12,000 crore.

Govt Bond yields in India rose post the RBI policy announcement with short end bonds falling more (and their yields rising more). Key reasons for this include no support to the Govt borrowing programme in FY23 announced in the policy despite the fact that the program is front ended. Also the downward revision in FY23 GDP estimates and upward revision in FY23 inflation estimates were more than expected. With the timing of inclusion of Indian bonds in international indices still uncertain, there could be a lot of pressure on the bond prices due to the inflation and borrowing program.

Nifty rose for second week in a row though formed a doji after a rise on weekly charts suggesting caution at higher levels. Q4 results season will start from Monday and the market's focus will shift to individual stocks. The RBI has turned mildly hawkish and this could impact the valuations in the markets over time. Nifty could now take support from 17522-17560 band and face resistance from 17900-17921 band over the next few days.

Source : Equity Bulls

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