Mr Mitul Shah, Head Of Research at Reliance Securities.
Indian equities ended higher led by broad-based gains across sectors. Nifty increased 0.9% while broader markets outperformed the main indices as Nifty Mid Cap and Nifty Small Cap rose 1.4% and 1.8% respectively. All sectoral indices ended in green except IT which lost 0.9%. Nifty Media witnessed the highest gain at 2.5%, followed by Nifty PSU Bank and Nifty Auto which were up 1.98% and 1.97% respectively. RBI expects inflationary pressures to remain high in the coming months and is expected to slide below 6% during 4QFY23.
U.S. equities ended moderately higher post a second day of testimony from Federal Reserve Chairman after he warned that rapidly rising interest rates threatened a recession. The S&P 500 rose 1%, Nasdaq gained 1.6%, while the Dow Jones rose 0.6%. 10-year U.S. Treasury note fell to 3.068% from 3.155%. Powell further mentioned that Fed would be reluctant to drop interest rates until there is clear evidence of inflation retreating. Meanwhile, U.S mortgage rates have reached the highest level in more than 13 years for the second straight week with the average rate on a 30-year fixed-rate mortgage clocking at 5.81%. Globally, amid the Russia-Ukraine war, the European Union leaders have agreed to make Ukraine an official candidate to join the bloc, opening the door to possible membership in the years to come.
As the heatwaves have diminished, monsoons will heavily influence India's economic outlook in the coming weeks. Farmers and the Indian government are banking on the monsoon rains to keep rice production, inventories and food inflation at a manageable level. Moreover, with 1QFY23 nearing its conclusion, investors are prepping for corporate earnings results for the quarter. Inflation continues to be a major threat to the world economy and central banks around the world are attempting to bring it under control. India is at a lower risk of stagflation owing to its prudent stabilization policies. Interest rate hikes, growing concerns about corporate profits and economic growth continue to throttle investor sentiments amid global issues of Russia-Ukraine war and rising COVID cases.