Pre Market Views - Dec 22, 2022 - Reliance Securities

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

The U.S. equities ended higher after strong consumer confidence data. The S&P 500 rose 1.4%, Dow Jones advanced 1.5%, while the Nasdaq added 1.5%. The yield on the benchmark 10-year Treasury note edged higher to 3.686%, compared with 3.683% the previous day. The gains accelerated after consumer confidence data jumped sharply in December to 108.3 to its highest level since April, against 101.4 in November. Sentiment around the economy and labor market improved, while inflation expectations for the year ahead dipped to 6.7%, the lowest in more than a year. Existing-home sales fell for a 10th straight month in November to extend the longest streak of declines on record. Sales of previously owned homes declined 7.7% in November from the prior month to a seasonally adjusted annual rate of 4.09 million, the weakest rate since May 2020. November sales fell 35.4% from a year earlier.

Indian equities ended lower led by weak global cues. Nifty fell 1%. Broader markets under-performed the main indices as Nifty Mid Cap and Nifty Small Cap were down 1.4% and 2.2% respectively. Majority of the sectoral indices ended in red except Nifty IT (+0.5%), Nifty Pharma (+2.4%) and Nifty Healthcare (+2.7%). Nifty Media lost the most at 3%, followed by Nifty PSU Bank and Nifty Metal which were down 2.9% and 2.3% respectively. Meanwhile, rising COVID cases in China have raised major concerns among market participants who expect an economic down-turn in the near-term. 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 in 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 150 points compared to previous spot Nifty closing. Asian Markets are trading in green; Nikkei is up 0.4% while Heng Seng is up 2.9%.

Source : Equity Bulls

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