Post Market views - April 6, 2023 - Reliance Securities

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

Indian equities ended marginally higher as investors mull over a slew of announcements made by the RBI. Nifty was up 0.2% while broader markets out-performed the main index with Nifty Mid Cap and Nifty Small Cap gaining 0.6% and 0.8% respectively. Majority of sectoral indices ended in green. Rate sensitive sectors rallied post the pause in the rate hikes. Nifty Realty gained the most at 2.8%, followed by Nifty Fin Services and Nifty Auto which were up 0.9% each. Nifty IT (-0.7%) and Nifty FMCG (-0.5%) were the major laggards. Meanwhile, the RBI's monetary policy committee (MPC) kept the repo rate unchanged at 6.5% contrary to consensus expectations of a 25bps rate hike. The MPC had raised rates 6 times consecutively in its previous meetings. It also revised India's real GDP growth projection to 6.5% in FY24 from 6.4% earlier. Additionally, the central bank also cut FY24 inflation target to 5.2% from 5.3% forecasted earlier in its Feb'23 meet, despite adverse weather conditions and risk of volatile global commodity prices.

U.S equities ended mixed as investors focused on fresh signs of a slowing U.S. economy. The S&P 500 ended flat, down 0.2%, the tech-heavy Nasdaq dropped 1.1% while the Dow Jones was the outlier, inching up 0.2%. The yield on the 10-year note fell to 3.285% from 3.335% a day earlier. A report on Wednesday from payroll-processing firm ADP suggested nonfarm private sector jobs rose by 145,000 in March, down from a 261,000 gain in February and below economists' expectations. Meanwhile, economically sensitive sectors of the S&P 500, including industrials, materials and real estate, have underperformed since bank stress came to the forefront in early March. All are down more than 4% over the last month.

Investors will now await the earnings outcome of the March quarter which will start trickling in from next week. The March inflation data will also come out next week. While the Indian economy still has some macroeconomic bottlenecks, overall it has been resilient despite the turbulent global environment. However, rising COVID cases have raised concerns. Additionally, impending recession in the US, higher crude prices along with the prospect of a below normal monsoon could act as headwinds for the Indian markets. Both the India and US markets will remain shut tomorrow on the occasion of Good Friday.

Source : Equity Bulls

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