Post Market views - Feb 16, 2023 - Reliance Securities

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

Indian equities ended largely flat amid positive cues in global markets. Nifty ended at +0.1% while broader markets out-performed the main indices as Nifty Mid Cap and Nifty Small Cap were up 0.7% and 1% respectively. Sectoral indices ended mixed. Nifty IT (+1.6%), Nifty Reality (+1.3%) and Nifty Metal (+1.2%) were the major gainers while Nifty Fin Service (-0.3%), Nifty Bank (-0.2%) and Nifty PSU Bank (-0.2%) were the major laggards. Meanwhile, data showed that India's imports from Russia has jumped ~5x to $37.31bn during April-January FY23 on account of increasing inbound shipments of crude oil from that country. Russia has become India's fourth largest import source during the 10-month period of the current fiscal.

The U.S. stocks ended higher despite data showing a rebound in retail sales, a sign of economic strength that could encourage the Federal Reserve to keep combating inflation by raising interest rates. The S&P 500 closed 0.3% higher and the Nasdaq jumped 0.9%. The Dow Jones ended higher by 0.1%. Retail sales rose 3% in January, bouncing back from recent declines as jobs growth accelerated. 10-year Treasury yields climbed to 3.808% from 3.760% Tuesday. It finally closed at 3.793%. Treasury yields have climbed steadily this month following strong jobs data and got a further boost from Tuesday's CPI report and yesterday's retail sales data.

The earnings season is almost over with a few results left to be reported. The aggregate results for the sample of NSE 500 companies so far has seen Revenue/EBITDA/PAT growth of 19%/ 11%/ 5% YoY. Profitability has been under pressure due to elevated raw material costs on a YoY basis. RM costs though have cooled off on a QoQ basis leading to improvement in gross margins. PAT growth has been impacted due to higher finance costs on the back of increase in interest rates. After dipping for two months, India's retail inflation surged in January to 6.52%, above the RBI's tolerance band of 2-6%. A surge was expected due to an unfavourable base effect from last year. But January's 6.52% rise against 5.72% in December was much higher than expected, partly fuelled by rising food prices. Food inflation was up 5.94% vs 4.2% in December. On the other hand, WPI eased to a 24 month low in January at 4.73% YoY vs 4.95% last month. This indicates moderating supply side pressures and should help in cooling down CPI in the coming months.

Source : Equity Bulls

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