Post Market views - March 23, 2023 - Reliance Securities

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

Indian equities ended lower, dragged by banking and financial stocks as markets mull over the US Fed's interest rate decision. Nifty was down 0.4%. Broader markets moved in tandem with the main index as Nifty Mid Cap and Nifty Small Cap were down 0.4% each. Sectoral indices ended mixed. Nifty Pharma and Nifty FMCG were the primary gainers, up slightly by 0.2% and 0.4% respectively. Nifty PSU Bank was the major laggard which plunged 1.7%, followed by Nifty Bank and Nifty Realty were lower by ~1% and 1.1% respectively.

U.S. equities and government-bond yields fell after the Federal Reserve raised interest rates but signaled that further hikes might be limited. The S&P 500 lost 1.7% while the Dow Jones and the tech-heavy Nasdaq declined 1.6% each. The benchmark 10-year Treasury yield fell to 3.46%, from 3.603% on Tuesday, retreating after two days of gains. The Fed hiked interest rates by 25bps and the Fed Funds target rate now stands in the range of 4.75% to 5%. FED Chair Mr. Powell said that recent turmoil in the banking sector could slow the economy, potentially cooling inflation and limiting how high the Fed will need to bring interest rates. However, he reiterated the goal of bringing inflation back to the 2% target.

The markets will closely follow global cues and the developments in the US and European banking system. Domestically, CPI and WPI have cooled and trade deficit has narrowed. Brent crude prices have recovered from the lows seen last week. The unseasonal rains this week have caused large scale crop damage across large swathes of India. This is likely to keep food prices higher in the coming months.

Source : Equity Bulls

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