Post Market views - April 12, 2022 - Reliance Securities

Mr Mitul Shah, Head Of Research at Reliance Securities.

Domestic equities ended lower, following sluggishness across global markets. Moreover, news on the Russia-Ukraine war, rise in bond yields and further supply disruptions due to increasing COVID infections in China, continue to perturb market sentiments. Nifty declined 0.9%, while broader markets underperformed compared to the main indices with Nifty Midcap and Nifty SmallCap losing 1.9% and 1.5% respectively. Most Sectoral indices ended in red except Nifty Bank (+0.4%) and Nifty PVT Bank (+0.5%). Nifty Reality declined the most at 2.8%, followed by Nifty Metal and Nifty IT which fell 2.7% and 1.7% respectively.

U.S equities ended lower primarily due to a major lag in tech stocks. The Dow Jones fell 1.2%, the S&P 500 lost 1.7% while the tech-heavy Nasdaq Composite dropped 2.2%. The yield on benchmark 10-year Treasuries increased more than 7bps to 2.79% and has been at its highest level since January 2019. Moreover, investors remain worried about supply chain disruptions, which could worsen due to the lockdowns in China.

Markets continue to face challenges, as the Russia-Ukraine war has stimulated a sharp rise in energy prices across the world and aggravated the supply chain and logistics issues. In addition, FED is preparing to take a more rigid monetary policy stance and shrink its balance sheet in an attempt to curb inflation. On the other hand, India's central bank has kept the repo-rates unchanged at 4% despite fears of rising inflationary pressures, whilst also downgrading the growth forecasts to 7.2% for FY23. Meanwhile, China's largest city, Shanghai, is facing food shortages amid raging COVID outbreak. Undoubtedly, the unprecedented economic damage due to the Russia-Ukraine crisis is likely to dictate the near-term market sentiment.

Source : Equity Bulls

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