Post Market views - Oct 6, 2022 - Reliance Securities

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

Indian equities corrected from day's high, although closed higher, while the market prepares for the upcoming earnings season starting form next week. The Nifty gained 0.3%, while broader markets out-performed the main indices as Nifty Mid Cap and Small Cap were up 1.2% each. Most sectoral indices ended in green. Nifty Metal was the major gainer, which climbed 3.3%, followed by Nifty Media which was up 2.7%. Nifty FMCG (-0.4%) and Nifty Pharma (-0.3%) were the primary laggards. The S&P Global India services PMI fell to 54.3 in Sep'22 from 57.2 in Aug'22 due to easing demand amid high inflation. Despite staying above the 50-mark for the fourteenth straight month, the longest stretch since Oct'16, the index fell to its lowest since March.

U.S. equities closed lower in volatile trading session, following mixed economic data. S&P 500 fell 0.2%, Nasdaq lost 0.3% while Dow Jones declined 0.1%. All indexes snapped a two-day long winning streak. The yield on the benchmark 10-year Treasury note rose to 3.757% from 3.616% on Tuesday. Economic data released on Wednesday showed signs of a strong economy, strengthening the belief that a Fed pivot is unlikely and fueling the market dip. The U.S. private sector added 208,000 jobs in September. Moreover, the U.S. trade deficit narrowed to $67.4bn in Aug'22 from a revised $70.5bn in Jul'22. Meanwhile, U.S. job openings fell by 10% in August and layoffs rose slightly.

The RBI raised its key repo rate by 50 bps to curb rising inflation. Central banks across the world are in the midst of inflation firefighting and many are rapidly raising their policy rates. RBI may have to keep up with the monetary policy tightening. Further rate hike of 35 bps is expected in Dec'22 followed by a pause with the RBI assessing US Fed actions, and impact of past rate hikes on domestic growth and inflation. India in all likelihood to prevent recession while US and Europe headed towards it. The market given positive response to the commentary on India's growth impulses and projection of 7% GDP growth with 6.7% inflation for FY23. Indian currencies remain strong vs other markets, all currencies have depreciated against the USD.

Source : Equity Bulls

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