Mr. Mitul Shah - Head of Research at Reliance Securities.
Indian equities ended higher despite weak global cues. Nifty was up 0.2%. Broader markets also ended on a positive note as Nifty Mid Cap and Nifty Small Cap gained 0.5% and 0.2% respectively. Majority of the sectoral indices ended in green. Nifty Realty (-0.7%) and Nifty Healthcare (-0.6%) were the primary laggards. Nifty Auto was the major gainer which climbed 0.9% followed by Nifty Oil & Gas and Nifty PSU Bank which were up 0.8% and 0.7% respectively. The India 10 yr bond yield inched up higher to 7.46%.
U.S. stocks tumbled after Federal Reserve Chair Jerome Powell said the central bank would likely to lift interest rates more than previously expected to fight inflation and cool down the economy. The Dow Jones dropped 1.7, the S&P 500 dropped 1.5% and technology-focused Nasdaq retreated 1.2%. The yield on two-year Treasury notes climbed to 5.011%, its highest close since 2007, from 4.892% on Monday. It finished more than 1 percentage point above the 10-year yield, the biggest such gap since September 1981. The 10 yr yield also touched 4% once again.
The market will closely track global cues in the absence of any major domestic triggers. The current heatwave and the unseasonal rains have led to crop damage and is likely to keep food inflation higher in the coming months. Meanwhile, prices of wheat, wheat products and sugar fell 10-13% in the last month despite a spike in demand during Holi. However, the prices were higher compared to the same period last year. The prices of wheat have slumped from record high of ~Rs3,200 per quintal in mid-January to about Rs2,100-Rs2,200 a quintal after the government started selling the cereal from its own stock to tame the prices. The retail prices of sugar are hovering around Rs41.6, ~0.2% lower MoM despite a slight blip in production.