Pre-Market views - March 7, 2022 - Reliance Securities

Mr Mitul Shah, Head Of Research at Reliance Securities

The US equities dropped to extend declines from Thursday and posted a weekly loss. S&P500 and Dow Jones declined by 1.3% each while NASDAQ fell by 2.8%, posted a fourth straight weekly losses. Treasury yields pulled back further as markets piled into safe havens including bonds and gold, the benchmark 10-year yield stood at below 1.8%. The risk-off tone Friday came amid reports that the U.S. was considering a ban on Russian crude oil imports, in a move that would further punish Russia for its invasion of Ukraine.

Indian equities dropped during the week amid the ongoing Russia-Ukraine conflict, firming crude oil prices and relentless selling by FPIs. The continued escalation of the conflict and its consequent global economic fallout continued to weigh on the investor's sentiment. The BSE Sensex lost 2.7% while The Nifty 50 index fell 2.5% for the week. Nifty Midcap index decline by 1.6% while Small cap lowered by 0.4% outperforming the Nifty. On sectoral front NIfty Auto declined the most by 9.2% followed by NIfty bank which declined by 5.6%. FII seems unstoppable as they have net sold shares worth Rs 7,631 crore. While DIIs have bought shares worth Rs 4,739. The global oil prices hit new highs of $130 mark after the Russia-Ukraine tensions showed no signs of any relief, which could push up domestic inflation and swell the current account deficit. And the repercussions are huge for India, given the fact that it depends on overseas supplies for nearly 85% of its oil imports.

Market may remain volatile due to the Russia-Ukraine crisis. Trend in global equities, the movement of rupee against the dollar and crude oil prices will dictate trend in the near term. The Indian economy is in good shape given the underlying stellar corporate earnings momentum, the cleansed balance sheets, improving asset quality of the banks, levers in place for capex cycle revival and credit off-take, probable manufacturing resurgence given PLI and other government reforms. This coupled with increasing DII participation can boost the markets to new heights once prevailing clouds of uncertainty disappear. However, over near term war issue would have high negative bearings on global equity markets including Indian equities. The markets are likely to see gap down opening, SGX nifty is down 433 points compared to Friday's spot Nifty closing. Asian markets trading in red (Nikkei is down 3.3%, while Hang Seng is down 3.4%)

Source : Equity Bulls

Keywords

PreMarketViews Nifty SGXNifty UkraineCrisis Sensex RelianceSecurities