The market witnessed profit selling in the second half after strong opening. Domestic market impacted by negative sentiments from other Asian markets as traders edged away from riskier assets amid renewed concerns about Covid-19, inflationary pressure in USA and outcome of upcoming Fed meeting. The broader market outperformed the main indices, NSE Mid-Cap up 0.1% while Nifty Small cap gained 0.2%. Sectors like Nifty IT and metal is trading in green, while PSU Banks, Realty and FMCG were lower by 0.7%-1%. Dovish RBI monetary policy boosted market sentiment last week, while major global events during the week would be key deciding factor for this week.
The central bank kept its stance, policy rate and corridor unchanged and not provided any forward guidance on the path of future policy rate increases. The government's focus is clearly on supporting growth through sufficient liquidity and low interest rates despite street fears over rising inflation, changes in interest rate policy by global economies and high commodity prices. However, India is at the beginning of capex revival phase and therefore corporate earnings recovery looks sustainable and premium valuations might sustain, barring near term hiccups.