Post Market views - June 8, 2022 - Reliance Securities

Mr Mitul Shah, Head Of Research at Reliance Securities.

Domestic equities rebounded and ended in green, taking positive cues from Asian markets, after registering its worst single-day decline in over 2 months. Nifty gain 2.9%, while broader markets underperformed compared to the main indices as Nifty Mid-Cap and Nifty-Small Cap rose 2.3% and 2.5% respectively. All sectoral indices ended in green. Nifty Media gained the most at 4.5% followed by Nifty Reality and Nifty Metal which were up 4.2% each. China cut its 5-year loan prime rate (LPR) by 15bps to ameliorate the economic slowdown, which bolstered investor sentiments. Moreover, Finance Minister, Nirmala Sitharaman suggested that India's economic growth is likely to be robust at 8.9% in FY23. While the earnings season is about to wind-up in a couple of weeks, markets are likely to remain highly volatile amid the prolonged Russia-Ukraine crisis and surging COVID cases in China.

U.S. equities ended in red after a volatile session due to fears of rising inflation, which could compel the central bank to tighten monetary policy even further. The S&P 500 lost 0.6%, Dow Jones fell 0.8% while Nasdaq declined 0.3%. The 10-year Treasury notes fell to 2.854% from 2.884% in the previous day. Earnings reports from some of America's biggest retailers have added to the concern, that the highest inflation in over 4 decades, could force the U.S economy into a recession. The war in Ukraine is augmenting the inflationary pressures, while Covid-19 shutdowns in China continue to disrupt supply chain and logistics.

The rupee hitting an all-time low, Fed's tightening policy and continuous FPI sale, are likely to have economic difficulties in the near-term. Rising inflationary pressure has compelled FED and other central banks across the world to begin raising interest rates in the coming months which has in-turn led investors to believe that an economic recession is looming. However, the Indian economy is running strong, primarily on account of a positive corporate earnings momentum. Globally, the Russia-Ukraine crisis and supply chain disruptions continue to impact the global and Indian equities.

Source : Equity Bulls

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