Post Market views - Dec 2, 2022 - Reliance Securities

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

Domestic equities closed lower snapping their eight-session rally, amid weak global cues. Nifty lost 0.6%, while broader markets outperformed the main indices as Nifty Mid Cap and Nifty Small Cap rose 0.7% and 0.6% respectively. Sectoral indices ended mixed. Nifty Media gained the most at 1.2% followed by Nifty Reality and Nifty Metal which were up 0.9% and 0.4% respectively. Nifty Auto (-1.1%) and Nifty Fin Services (-0.6%) were the major laggards. Meanwhile, protests in China against the Zero-COVID policy could impact India's consumer goods. In Oct'22, India's engineering exports to China fell 64%.

U.S. equities ended mixed in a volatile trading session. The S&P 500 was off 0.1%, Dow Jones fell 0.6%, while the tech-heavy Nasdaq Composite Index gained 0.1%. The yield on the benchmark 10-year Treasury fell to 3.525%, from 3.699% Wednesday. US consumer spending increased by 0.8% in October, the strongest gain since June. Households spent more on essentials such as rent and food, and new vehicles. Adjusted for inflation, spending rose 0.5%, the biggest increase since January. But the personal-saving rate, hit its lowest level since 2005, a sign that rising prices are squeezing household budgets.

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. RBI's rate-panel is expected to increase repo rates by 25-35bps in its meeting from 5-7 Dec '22. 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. 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.

Source : Equity Bulls

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