Post Market views - Sep 19, 2022 - Reliance Securities

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

Indian equities closed higher in a choppy session despite weak global cues. The Nifty rose 0.5%, Nifty Mid Cap was largely flat while Nifty Small Cap fell 0.9%. Most of the sectoral indices ended in green except Nifty Metal (-0.5%) and Nifty Reality (-1%). Nifty PSU Bank gained the most at 2% followed by Nifty Media and Nifty FMCG which were up 1.3% and 1.1% respectively. Meanwhile, nervousness persisted in the global market ahead of key central bank decisions due this week.

U.S. equities closed lower for the week on fear of a possible downturn in the U.S. economy. Dow lost 4.1%, S&P fell 4.8% while Nasdaq plummeted 5.5% for the week, its worst since June. All three indexes are down in four of the past five weeks. The yield on the benchmark 10-year Treasury note also fell slightly, to 3.447%. The market expects that the Fed will keep raising rates aggressively, which could eventually lead to the economy into a recession. There is a 76% probability that the Fed will raise interest rates by another 75 bps. The delivery giant FedEx Corp lost 21% of its market cap on Friday, its biggest one-day percentage drop ever, after the company said that a macroeconomic slowdown had led to lower volumes of goods moving around the world in recent weeks.

The recently released US inflation data, has confirmed that the inflation print would force the US Fed to increase its pace of rate hikes. Moreover, the global slowdown concerns have been aggravated by COVID restrictions in China. While both the US Fed and India's RBI have taken a hawkish stance to fight against the simmering inflationary pressure, the macroeconomic uncertainties are going to intensify the market going ahead. India is trading at a premium valuation compared to emerging markets on high growth expectations. We expect the outperformance to continue given the FII investments and strong macros for the Indian economy. We expect strong economic rebound and better visibility in the near term. However, global markets including India are likely to see some correction in the next couple of weeks.

Source : Equity Bulls

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