Post Market views - July 4, 2022 - Reliance Securities

Mr Mitul Shah, Head Of Research at Reliance Securities.

Indian equities closed higher with Nifty rising by 0.5% while broader markets outperformed main indices as Nifty Mid Cap and Nifty Small Cap increased 0.9% and 0.6% respectively. Sectoral indices ended mixed with Nifty FMCG witnessing the highest jump at 2.7% followed by Nifty PSU Bank which climbed, 1.7%. Nifty Metal and Nifty IT were the major laggards which slumped 1% and 0.6% respectively. Meanwhile, the revenue secretary stated that India will only withdraw its windfall tax for oil producers and refiners, introduced earlier, if global crude prices fall as much as $40 a barrel from current levels. Global macroeconomic trends, movement in crude oil prices and FII activity will dictate the markets ahead of the start of quarterly earnings season.

U.S. equities ended lower with S&P 500 lost 2.2% for the week. The Dow Jones was down 1.3% while the Nasdaq declined by 4.1% during the week. 10-year Treasury note fell to 2.901%. The market considered whether the Federal Reserve might ease away from its aggressive path of interest-rate increases in the months ahead. Inflation remains persistent, while consumer sentiment have been at its lowest since 1952. U.S. factories showed that manufacturing activity decelerated in June while released in the week showed that U.S. household spending slowed in May. Elevated energy prices have been a key component of higher inflation. Brent crude, the international benchmark for oil prices, rose 2.4% on Friday to end at $111.63 a barrel. U.S. markets will be closed on Monday.

As 1QFY23 has ended, markets await on corporate earnings results for cues. Rising inflationary pressures and concerns of global recession, continue to impact overall sentiments amid geopolitical issues of the prolonged Russia-Ukraine war. With the arrival of monsoons, crop sowing has picked up its pace which should mitigate food inflation, and is likely to influence India's economic outlook in the coming weeks. The government is banking on the monsoon to keep rice production, inventories and food inflation at a manageable level. While Oil and food input prices have majorly pushed up inflation, commodity prices are showing signs of settling down. Moreover, recent changes in tax rates on several goods and services approved by the GST council, increased export duties on fuel, and hikes in import duty of gold, are other factors which could affect India's economy in the near-term.

Source : Equity Bulls

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