Pre-Market Views - Dec 20, 2022 - Reliance Securities

Mitul Shah - Head of Research - Institutional Desk, Reliance Securities Ltd.

The U.S. equities fell led by a broad-based decline across sectors from banks to technology companies. The S&P 500 fell 1.3%, Dow Jones was down about 1%, while, Nasdaq dropped 1.7%. The yield on 10-year Treasury rose to 3.584% from 3.481% on Friday. U.S. retail sales has fuelled some concerns that consumers are beginning to feel the bite of high borrowing costs and inflation. Meanwhile, a surge in Covid-19 cases in China has raised questions about its recent loosening of pandemic restrictions.

Indian equities ended higher as Nifty rose ~0.8%. Nifty Mid Cap and Nifty Small Cap were up 0.7% and 0.5%. All the sectoral indices ended in green except Nifty IT (-0.5%) and Nifty PSU Bank (-0.1%). Nifty Auto gained the most at 1.6%, followed by Nifty FMCG and Nifty Metal which were up 1.5% and 1.3% respectively. Major central banks globally have made it clear that the monetary policy tightening is expected to continue going ahead. The RBI recently raised interest rates by 35bps while FED, ECB and Bank of England followed with a 50bps hike each in order to tackle inflation. In India, inflation numbers have softened as November CPI inflation dropped to 11-month low. WPI inflation for the same month has crashed to a 21-month low. This has been mainly because of softening food and commodity prices, which will in all probability play a decisive role in RBI's policy action in February. Moreover, the ongoing Russia-Ukraine crisis remains a major concern while in China, there has been a massive rise COVID cases post the easing of Zero-COVID policy. The markets are likely to remain volatile in the coming weeks.

The markets are likely to see gap up opening; SGX Nifty is up 37 points compared to previous spot Nifty closing. Asian Markets are trading mixed; Nikkei is up 0.3% while Heng Seng is down 1%

Source : Equity Bulls

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