Mr. Mitul Shah - Head of Research at Reliance Securities
Indian equities closed higher after U.S. data hinted at less aggressive rate hikes. Nifty gained 1.4% while broader markets under-performed the main indices as Nifty Mid Cap and Nifty Small Cap were up 0.9% and 0.6% respectively. All sectoral indices ended in green except Nifty Consumer Durables (-0.5%). Nifty IT gained the most at 2.8% followed by Nifty Metal and Nifty Oil & Gas which were up 1.4% each. Meanwhile, the India-US Trade Policy Forum (TPF), set up to resolve trade and investment issues between the two countries, will hold a meeting in Washington on January 11.
The U.S. equities ended higher after fresh data showed a slowdown in wage growth, an upbeat sign for the Federal Reserve's battle against inflation that could ease pressure for further interest-rate increases. The Dow Jones rose 2.1%, S&P 500 climbed 2.3%, while Nasdaq advanced 2.6%. All three rose ~1% for the week. The Labor Department's monthly jobs report showed that employers added 223,000 jobs in December, the smallest gain in two years but more than the 200,000 expected by economists. The yield on the benchmark 10-year Treasury note dropped to 3.570%, from 3.720% Thursday.
The market is awaiting on the 3QFY23 earnings result for further cues. The inflation in the US, Europe and other economies may have peaked out. Meanwhile, central banks across the globe are pushing ahead with unwinding of their pre-COVID ultra-loose monetary policies, though at a slower pace. While the Indian markets have remained resilient as compared to the global economy, the RBI is expected to continue raising rates in the near term. Moreover, geopolitical issues involving Russia-Ukraine, China-Taiwan, and a fresh spike in crude oil prices are threatening to upset markets even further. India is expected to maintain healthy pace of GDP growth of ~7% over the next few years and would remain among the fastest growing economies globally this decade.