Post Market views - Nov 18, 2022 - Reliance Securities

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

Domestic equities closed slightly lower tracking weakness across global markets. Nifty was down 0.2%, while broader markets under-performed the main indices as Nifty Mid Cap and Nifty Small Cap fell 0.5% each. All sectoral indices ended in red except Nifty PSU Bank (+1.5%) and Nifty Reality (+0.1%). Nifty Auto and Nifty Oil & Gas were the primary laggards which plunged 1.2% and 0.7% respectively. Meanwhile, food inflation remains a major concern as unseasonal rains in late September and early October have delayed the sowing of rabi crops such as mustard, wheat and potatoes by a fortnight as farmers from certain areas are still harvesting the kharif crop.

U.S. equities closed lower, as expectation of potential slowdown in interest-rate hikes to have faded. The S&P 500 fell 0.6%, Nasdaq was down 0.7%, while Dow Jones slipped 0.3%. All three indexes remain up for November. The yield on 10-year Treasury notes climbed to 3.79% from 3.693% on Wednesday. Meanwhile, data showed that 222,000 people filed for initial jobless claims last week, which is down by 4,000 from the week before and points to continuing strength in the labor market.

The 2QFY23 earnings season has ended with healthy revenue growth, but inflationary pressure took toll on profitability. Revenue of BSE 500 companies grew healthy 27% YoY, EBITDA grew by just 4% YoY while PAT fell by 7% YoY. Currency fluctuations, elevated commodity and logistics costs, and geo-political issues were the major inhibitors of growth. However, we expect a recovery starting 3QFY23 led by softening of commodity prices and monetary easing by central banks which is likely to boost demand.

Source : Equity Bulls

Keywords

PostMarketViews RelianceSecurities Nifty Sensex