Mr. Mitul Shah - Head of Research at Reliance Securities.
Domestic market erased earlier losses and closed lower. The Nifty declined 0.2% while Nifty Mid Cap and Small Cap rose 0.5% and 0.9% respectively. Sectoral indices ended mixed with Nifty Media was major gainer which climbed 1.3% followed by Nifty Pharma which gained 0.7%. Nifty Auto was major laggard which plumped 1.2%. The government is looking to introduce a framework to regulate social media platforms, including de-platforming of users. The proposed framework would be prospective and therefore existing cases of suspension of social media accounts would have to be decided in terms of the existing regulations.
U.S. equities closed lower with Dow Jones fell 0.6%, S&P 500 lost 0.4% while Nasdaq dropped 0.7%. The 10-year Treasury yield surged 15 bps to 3.34%. It hit a recent low of 2.52% on Aug. 2. The British construction companies suffered a second straight month of contraction in the face of deep uncertainty about the outlook for the inflation-hit economy. The S&P Global construction PMI came in at 49.2 in August, edging up from 48.9 in July but staying below the 50.
India's GDP data for Q1FY23 came in at 13.5%, but still lagged the consensus estimate of 15.2%. Total FDI shrank 0.79% to $22.34bn in the June quarter. Moreover, Unemployment rate in urban areas eased to 7.6% in Q1FY23 from 8.2% in the trailing quarter. India's GDP growth is expected at 7% in FY23, although challenges remain in the form of the global slowdown, geo-political uncertainties and policy tightening. The RBI is likely to opt for slower pace of hikes in forthcoming meeting. The RBI has already hiked the repo rate by 1.4% in three consecutive actions since May this year, in response to the high inflation which has been consistently breaching upper end of RBI's tolerance band. India's retail inflation may be moderating after hitting a peak recently.