Mr Mitul Shah, Head Of Research at Reliance Securities.
Domestic equities witnessed a positive start but closed lower tracking weak global cues amid growing concerns about US recession. Nifty declined 0.4% while broader markets underperformed compared to the main indices as Nifty Mid-Cap and Nifty-Small Cap fell by 1.2% and 0.8% respectively. Most sectoral indices ended mixed with Nifty Pharma plunging the most at 2.2%, followed by Nifty IT and Nifty Auto which plummeted 1.5% and 1.2% respectively. Nifty Bank and Nifty PVT Bank were the gainers which increased ~0.4% each.
U.S. equities ended sharply lower, reversing a rally in the previous session. The S&P 500 fell 3.3%, while the Dow dropped 2.4%. Both indexes ended at their lowest closing levels since Dec'20. The Nasdaq Composite slumped 4.1%, its lowest close since Sep'20. 10-year U.S. Treasury note fell to 3.303% from 3.389% in the previous day. The FED announced a 75bps interest rate hike but stated that such an increase wouldn't become common. However, high inflation, rising interest rates, growing concerns about corporate profits and economic growth continue to throttle investor sentiments amid global issues of Russia-Ukraine war and rising COVID cases. Moreover, ECB and Swiss central bank also hiked interest rate pulling down European markets significantly.
India's retail inflation came down to 7.04% YoY in May from 7.79% in April owing to easing food prices in the month of May. The government is eager to assist with inflation management in order to keep monetary tightening to a minimum. Following RBI's 50 bps hike, US Fed raised interest rates by 75bps as expected. The ECB raised its inflation projections but cut its growth outlook as the conflict in Ukraine continues to weigh on confidence, consumption and investment. Globally, Russia-Ukraine war continues to impact market sentiments while Shanghai prepares for a reopen after several weeks of lockdown.