Post Market views - Nov 4, 2022 - Reliance Securities

Mr. Mitul Shah - Head of Research at Reliance Securities.

Domestic equities closed higher led by rally in Metal stocks, despite weak global cues on fears of sustained interest rate hikes by the central banks. Nifty gained 0.4% while Nifty Mid Cap fell 0.3% and Nifty Small Cap was up 0.4%. Sectoral indices ended mixed. Nifty Pharma and Nifty Healthcare were the major laggards which fell 1% each. Nifty Metal and Nifty Media gained the most at 4.2% and 1.1% respectively.

U.S. stocks fell in a volatile session a day after the Federal Reserve broadcast that it will keep raising interest rates. The S&P 500 declined 1.1%, the Dow Jones Industrial Average was down 0.5% and the tech-heavy Nasdaq Composite fell 1.7%. The yield on 10-year Treasury notes rose to 4.123% from 4.059% on Wednesday. Inflation remains stubbornly high at 8.2% in Sep'22, despite the Fed's attempts to rein it in. Meanwhile, the Bank of England followed the Fed in raising rates by 75bps, the U.K. central bank's biggest rate increase since 1989.

Federal Reserve raised policy rate by 75bps for a fourth straight time. The 2QFY23 earning season so far witnessed healthy revenue growth but higher inflationary pressure took toll on profitability. Inflation continues to remain high, both in the domestic and the US economy. Any disappointment in earnings or weak management commentary on demand may lead to correction given sharp outperformance of Indian equities. India' is expected to maintain healthy growth pace of ~7% GDP growth over the next few years and be among the fastest growing economies globally this decade. The global companies trying to re structure supply chains leading to China plus one strategy which is likely to continue to favour India's growth prospects in the coming years.

Source : Equity Bulls

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