Post Market views - Sep 6, 2022 - Reliance Securities

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


Domestic markets closed lower after a volatile session. The Nifty decreased 0.1% while Nifty Mid Cap and Small Cap rose 0.7% and 0.3% respectively. Sectoral indices ended mixed with Nifty Media as major gainers which climbed 1.4% followed by Nifty PSU Bank which gained 0.5%. India's monetary policy will remain watchful, nimble-footed and calibrated. The RBI remains committed to support the market with two-way operations, as warranted, in line with the revised liquidity management framework, The RBI will also strive to ensure stable money market conditions, the smooth conduct of the primary auctions in G-secs and facilitate the orderly evolution of the yield curve.

U.S. markets were shut on Labor Day yesterday. Last week it closed lower in the range of 3-4%. The yield on the benchmark 10-year Treasury note continued its streak of gains and settled at 3.195%. The U.S. economy added 315,000 jobs in August, largely in line with the estimates. Mary Elizabeth Truss, prominently referred to as Liz Truss, announced as the next prime minister of the United Kingdom, after she defeated rival Rishi Sunak in the Conservative Party leadership race. On the data side, The Bank Japan Services PMI dropped to 49.5 for August, lower than 50.3 in July. The marginal decline marks the first contraction in service sector business activity since March. On other hand, Japan's household spending grew for a second straight month in July despite a resurgence in COVID-19 cases, but inflationary pressures from the yen's slump to a 24-year-low have cast doubt over a revival in consumption. Household spending rose 3.4% YoY in July. The reading was lower than economists' median estimate for a 4.2% gain and followed 3.5% growth in June.

Meanwhile, the G-7 agreed to explore the prospect of imposing a ban on shipments of Russian oil above a certain price in June.

India's GDP data for Q1FY23 came in at 13.5%, but still lagged the consensus estimate of 15.2%. Total FDI shrank 0.79% to $22.34bn in the June quarter. Moreover, Unemployment rate in urban areas eased to 7.6% in Q1FY23 from 8.2% in the trailing quarter. India's GDP growth is expected at 7% in FY23, although challenges remain in the form of the global slowdown, geo-political uncertainties and policy tightening. The RBI is likely to opt for a slower pace of hikes in forthcoming meetings. The RBI 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 the upper end of RBI's tolerance band. India's retail inflation may be moderating after hitting a peak recently.

Source : Equity Bulls

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