Mr Mitul Shah, Head Of Research at Reliance Securities.
Domestic equities ended the day in red as investors await on the outcome of a bi-monthly review by the RBI during the week. Nifty was down 0.9% while broader markets underperformed compared to the main indices as Nifty Mid-Cap and Nifty-Small Cap dropped 0.7% and 0.5% respectively. Sectoral indices ended red except Nifty Auto; Nifty Auto witnessed a gain of 0.5%. Nifty Realty was the major laggard which declined 1.7% followed by Nifty Media which was down 1.6%.
U.S. equities ended marginally higher yesterday with S&P 500 increasing by 0.3%, ending the session towards the low point of the day. The Dow Jones was up 0.1%, while tech-heavy Nasdaq increased. 10-year Treasury notes rose to 3.0491%. The economy is likely to blow hot and cold for the immediate future, Morgan Stanley's co-president said, as the economy swings between fears of inflation and fears of contraction. AS per Morgan Stanley, chances of a recession are steadily rising, marked by periods of a hot and cold economy. They forecast an economic downturn and slowdown in banking business if inflation and inflationary expectations are cementing by next fall, as this would force the Fed to tighten monetary policy and raise interest rates even higher.
The Indian economy's growth moderated to 4.1% in 4QFY22, while the growth rate of real GDP for FY22 has been pegged at 8.7%. India's GDP had contracted by 6.6% in FY21. The GST revenue for the month of May stood at Rs1,400bn, up 44% YoY. Moreover, while India's merchandise exports rose by 15.5% to $37.3bn in May on account of healthy performance by sectors like petroleum products, electronic goods and chemicals, the trade deficit widened to $23.3bn during the month. 4QFY22 reported strong performance despite inflationary pressure. Revenue of BSE500 for 4QFY22 grew by 22% YoY while PAT grew by 25% YoY. The RBI Monetary Policy Committee will meet on June 6-8, the Committee is widely expected to hike interest rates. The week will also see the meetings of the European Central Bank (ECB) and the Reserve Bank of Australia. The monsoon rain has arrived in India. The India Meteorological Department has forecast a normal monsoon season for 2022, stoking hopes of a healthy crop season. The main focus for the next week would be on the Reserve Bank of India's interest rate decision on June 8. The Indian equities will likely see another tumultuous week as the central bank would take its strict stance in an attempt to curb inflationary pressures.
Investors are still attempting to gauge the market's trajectory as global markets have also remained volatile due to FED's upcoming policy decisions and the Russia-Ukraine crisis which is affecting supply chain and logistics. The main focus for the next week would be on the Reserve Bank of India's interest rate decision on June 8. The Indian equities will likely see another tumultuous week as the central bank would take its strict stance in an attempt to curb inflationary pressures. RBI is looking at another phase of coordinated action between fiscal and monetary authorities. And all eyes are on RBI and the US Fed in which further rate hike is expected. The primary focus will be on central banks' policy measures to stabilize inflation. Changes in oil prices and amendments to import and export duties might play a role in assessing the movement of the market next week. The continued selling by FIIs and plunging rupee are likely to have economic implications in the near term. Globally, the Russia-Ukraine crisis and supply chain disruptions continue to impact global and Indian equities.