Post-market views - June 30, 2023 - Reliance Securities

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

Indian equities closed higher following positive cues in the global markets as Nifty was up by 1.1%, while broader markets under-performed the main index with the Nifty Mid Cap and Nifty Small Cap, up 0.7% and 0.4% respectively. All of sectoral indices ended in green except Nifty Metal which ended largely flat. Nifty IT (+2.5%), Nifty Auto (+2.1%) and Nifty PSU Bank (+2.1%) were the major gainers. Meanwhile, Economists suggest that the late arrival of monsoon in India and shrinking sowing areas for rice and pulses could lead to a hike in food inflation by 50-60bps.

U.S. stocks ended mostly positive after strong economic data which bolstered expectations that the FED will raise interest rates further to tame inflation. S&P 500 closed 0.4% higher, while the tech-focused Nasdaq Composite recovered earlier losses to close flat. The Dow was up 0.8%. Yields on 10-year bonds jumped 0.13 percentage points to 3.84%. A final revision to US first-quarter GDP showed the economy growing at an annualised pace of 2% in the first three months of the year, well above the 1.3% rate previously reported.

The delay in monsoon rains and possible onset of the El Nino is triggering caution among policymakers. However, economic activity has held up well so far in Q1FY24 and there is increased optimism on the domestic economy. Meanwhile, CAD narrowed to $1.3bn or 0.2% in 4QFY23 from $16.8bn or 2% of GDP in Q3FY23 and $13.4bn in Q4FY22. In the U.S, Federal Reserve and other central bank chiefs have suggested that interest rates may need to rise further to curb inflation. Bank stocks in particular, have performed well as large US banks passed the Fed's annual stress test, proving they have enough capital to withstand a sharp economic downturn.

Source : Equity Bulls

Keywords

PostMarketViews Nifty Sensex RelianceSecurities