Mr. Mitul Shah - Head of Research at Reliance Securities.
Indian equities closed largely flat in a volatile session. Broader markets outperformed as compared to the key equity indices as the Nifty Mid Cap and Nifty Small Cap were up 0.2% and 0.4%. Most sectoral indices ended in green. The Nifty Metal rose the most at 1.9%, followed by Nifty PSU Bank and Nifty Reality which were up 1.2% and 0.7% respectively. Nifty IT and Nifty Healthcare were the major laggards which fell 0.5% and 0.4% respectively. Meanwhile, the RBI is expected to hike rates by 25-35bps in its meeting this week from 5-7 Dec '22. Globally, recent protests in China and rising COVID-19 cases, and the ongoing Russia-Ukraine crisis continue to negatively impact global sentiments.
The U.S. equities closed lower on Friday after stronger-than-expected jobs report cast doubt on how quickly the Federal Reserve will slow down its pace of interest-rate increases. The S&P 500 was down 0.5%, the Dow Jones fell 0.3% while Nasdaq declined 0.8%. For the week, S&P 500 was up ~1%, the Dow Jones rose 0.1%, and the Nasdaq Composite gained 1.9%. The yield on the benchmark 10-year Treasury edged lower to 3.517% from 3.525% on Thursday. Meanwhile, report showed that average hourly earnings jumped 0.6% for the month, a sign that wage pressure isn't easing. Moreover, labor-force participation rate tickled down to 62.1%, which could lead to even higher competition for workers. The employers added 263,000 jobs in November, holding near the strong gains of the previous three months, when they averaged 282,000 a month.
The global economy continues to face inflationary pressures though the recent commodity and food price softening may boost demand going ahead. However, central banks are expected to raise interest rates until they achieve their targeted level. RBI's rate-panel is expected to increase repo rates by 25-35bps in its meeting from 5-7 Dec '22, followed by the FED which may raise rates by another 50bps on 14 Dec'22. The movement of rupee against the dollar, FII flow and crude oil prices will affect markets in the near term. The endless Russia-Ukraine crisis and massive protests in China against the Zero-COVID policy remain the major global concerns.