Post Market views - Nov 1, 2022 - Reliance Securities

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

Domestic equities closed higher led by broad-based gains across sectors. Nifty gained 0.7% while Nifty Mid Cap and Nifty Small Cap climbed 0.9% and 0.2% respectively. All of the sectoral indices ended higher. Nifty Metal and Nifty Pharma climbed 2.4% and 2.1% respectively, followed by Nifty Realty and Nifty Energy which gained ~1% each. Meanwhile, the government has hinted that crypto regulation would be a priority during G20, which begins next month. India's focus would also be on dealing with cross-border remittances, the issue of global capital flows and the creation of buffers for developing countries that are affected by the policy spill-overs of developed countries.

U.S. equities closed lower as the Federal Reserve prepare to discuss on rate hike to calm inflation. The S&P declined 0.7%, Nasdaq shed 1% while Dow Jones dropped 0.4%. The Dow Jones added 14% in Oct22 for its best month since 1976. The S&P 500 and the tech-focused Nasdaq Composite both notched single-digit monthly gains. The 10-year Treasury yield climbed to 4.074%, from 3.802% at the end of September. Japan's manufacturing activity grew at its slowest pace in 21 months in October on marked declines in output and overall new orders, as exports were partly hurt by worsening conditions in China and South Korea. The au Jibun Bank Japan Manufacturing Purchasing Managers' Index fell to a seasonally adjusted 50.7 in October from September's 50.8 final.

The 2QFY23 earning season so far witnessed healthy revenue growth but higher inflationary pressure took toll on profitability. For 160/BSE500 companies revenue grew by 25% YoY, EBITDA increased by 17% YoY while PAT was up 8% YoY. Inflation continues to remain sticky, both, in the domestic and the US economy. Any disappointment in earnings or weak management commentary on demand may lead to correction given sharp outperformance of Indian equities. India' is expected to maintain healthy growth pace of ~7% GDP growth over the next few years and be among the fastest growing economies globally this decade. The global companies trying to re structure supply chains leading to China plus one strategy which is likely to continue to favour India's growth prospects in the coming years.

Source : Equity Bulls

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