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Market Commentary
Post Market views - Sep 13, 2022 - Reliance Securities
Posted On : 2022-09-13 19:28:44( TIMEZONE : IST )
Mr. Mitul Shah - Head of Research at Reliance Securities.
Indian equities closed higher tracking positive global markets despite poor CPI and IIP data. Nifty rose 0.8%. The broader markets under-performed the main indices as Nifty Mid Cap and Small Cap rose marginally by 0.1% and 0.2% respectively. Most sectoral indices ended in green with Nifty Metal gained the most at 1.3% followed by Nifty Consumer Durables and Nifty Fin Service which were up 1% and 0.9% respectively. Nifty Reality and Nifty Oil & Gas were the major laggards which dipped 0.2% each. India's retail CPI inflation, surged to 7% in Aug'22 compared to 6.71% in Jul'22. Industrial growth, as measured by IIP index, tumbled to 2.4% in Jul'22 as compared to 12.3% in Jun'22. Moreover, a report has suggested that the RBI may raise interest rates by another 50bps this month.
U.S. equities closed higher as the S&P 500 gained 1.1%, Dow Jones added 0.7%, while Nasdaq climbed 1.3%. All three indexes posted their fourth consecutive gains. The yield on the benchmark 10-year Treasury note rose to 3.361% from 3.321% on Friday. Despite some signs of inflation decelerating, the markets largely expect Fed officials to continue tightening monetary policy. Fed could raise interest rates by another 75 bps next week.
The US Federal Reserve reiterated the need to act strongly against inflation, leading markets to expect more interest rate hikes in the near future. India is trading premium valuations compared to emerging market on high growth expectations. We expect the outperformance to continue given FII investment coupled with strong macros for India compared with other markets. India's GDP data for Q1FY23 came in at 13.5%, and GDP growth is expected to sustain at 7% in FY23, which is the highest among emerging markets. We expect strong economic rebound, normalised commodity prices, inflation within targeted range and better visibility in the near term.
