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Market Commentary
Post Market views - Nov 28, 2022 - Reliance Securities
Posted On : 2022-11-28 19:28:19( TIMEZONE : IST )
Mr. Mitul Shah - Head of Research at Reliance Securities.
Domestic equities closed higher after negative opening. The Nifty gained 0.3%, while broader markets out-performed the main indices as Nifty Mid Cap and Nifty Small Cap gained 0.7% and 1.2% respectively. Majority of sectoral indices ended in green except Nifty Metal (-1.1%) and Nifty Fin Service (-0.1%). Nifty Auto gained the most at 0.6% followed by Nifty FMCG and Nifty Pvt Bank which were up by 0.34% and 0.27% respectively. Meanwhile, IRDA has announced new expenses of management rules relaxing bunch of relaxations on capital and distribution tie-ups.
The U.S. equities rallied in the holiday-shortened week. The Dow Jones hit a seven-month high and jumped 1.7% for the week, the S&P 500 climbed 1.5%, while Nasdaq advanced 0.8%. The 10-year Treasury yield fell 11 bps to 3.71%. Meanwhile, China left its benchmark lending rate unchanged for a third month in a row. The one-year loan prime rate is steady at 3.65%, and the five-year rate is also on hold at 4.3%. China has reportedly signalled that more monetary stimulus was on the cards, including a likely cut to the reserve requirement ratio for banks, as it ramps up support for an economy under strain from surging Covid cases and more lockdowns.
The recent labor data and relatively lower inflation print will reinforce expectations for a smaller 50 bps Fed rate hike on Dec. 14 and perhaps signal a further slowing in the pace of rate increases early next year. The run-up to the exercise for the Budget is building up with job creation and a step-up in government capex, being the primary focus. Though the economy is making a concerted effort to overcome the troubles along the way, fast-changing geopolitics is casting its long shadow. We expect a recovery in the coming quarters led by softening of commodity prices and monetary easing by central banks which is likely to boost demand going ahead. The movement of rupee, FII flow and crude oil prices will dictate trend in the near term, while volatility is likely to remain due to endless Russia-Ukraine crisis and new COVID cases in China.
