Post Market views - Sep 2, 2022 - Reliance Securities

Mr. Mitul Shah - Head of Research at Reliance Securities.

Domestic markets closed largely flat amid mixed global markets. Broader markets under-performed the main indices as Nifty Mid Cap and Small Cap fell 0.1% and 0.2% respectively. Sectoral indices ended mixed. Nifty Fin Service and Nifty Media were the gainers which climbed 0.5% each. Nifty Oil & Gas and Nifty PSU Bank were the laggards which plunged 1% and 0.7% respectively. Meanwhile RBI data showed that India's services exports went up by 20.2% YoY to $23.26bn in Jul'22, while imports increased 22.3% YoY to $13.92bn. Moreover, the gross GST revenue collected in the month of Aug'22 was up 28% YoY and stood at Rs 1.44 lakh crore.

U.S. equities closed mixed as investors mulled over the possibility of higher interest rates. The S&P 500 added 0.3%, after earlier dipping by 1%. The Nasdaq Composite was down 0.3% after declining more than 2% earlier. The Dow industrials rose 0.5%. Yield on the 10-year Treasury note rose to 3.264% from 3.131% on Wednesday. Meanwhile, a survey showed that the ISM Manufacturing PMI for August came in at 52.8, even with July and above expectations of 51.8. Moreover, the Labor Department stated that initial jobless claims decreased to a seasonally adjusted 232,000 last week from a revised 237,000 the previous week. On Friday, the department will report the number of jobs the U.S. economy added in August and will include updated figures on wage gains.

The RBI's rate setting panel is likely to opt for slower pace of hikes and increase the repo rate by 25 bps in September. The central bank has already hiked the repo rate by 1.4% in three consecutive actions since May this year, in response to the high inflation which has been consistently breaching upper end of RBI's tolerance band. The Monsoon in India is ~6% above long-term average till now. India's retail inflation may be moderating after hitting a peak in April but there are some upside risks that will weigh on RBI as it decides the course of future rate hikes. We expect some profit booking to continue in the near term. Globally, the Federal Reserve will continue raising interest rates and hold them at a higher level until inflation is under control and at the 2% level.

Source : Equity Bulls

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