Pre-Market View - Nov 29, 2022 - Reliance Securities

The U.S. equities fell as widespread protests across China against the country's zero-Covid policy sparked worries for the outlook of global growth. The S&P 500 fell 1.1% while Dow Jones and Nasdaq lost 1% each. The yield on the 10-year U.S. Treasury note rose to 3.703%, from 3.701% on Friday. Moreover, comments from New York Fed President indicated that interest rates could remain higher if inflationary pressure persists. The market is awaiting the Labor Department's November jobs data to be released on Friday, which will likely to influence heavily into the Fed's December interest-rate decision.

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 recent labour 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.

The markets are likely to see gap up opening; SGX nifty is up 105 points compared to previous spot Nifty closing. Asian Markets are trading mixed; Nikkei is down 0.6% while Heng Seng is up 2.8%.

Source : Equity Bulls

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