Mr. Mitul Shah - Head of Research at Reliance Securities.
Indian equities ended higher led by broad-based gains on the day of the monthly F&O expiry. Nifty Closed 0.8% higher while broader markets out-performed the main index as Nifty Midcap and Nifty Smallcap were up 1.5% and 1.7% respectively. All of the sectoral indices ended in green. Nifty PSU Bank gained the most at 3.2%, followed by Nifty Media, Nifty Realty and Nifty Metal which were up 2.7%, 2.5% and 2.4% respectively. Meanwhile, according to a Reuters Poll, 49 out of 62 economists suggest that the RBI will raise its interest rate by 25bps again on April 6 and then pause for the rest of the year. Inflation remains above RBI's upper tolerance limit of 6.0%, reaching 6.52% in Jan'23 and easing only slightly to 6.44% in Feb'23.
U.S. stocks edged lower led by a drag in technology stocks. An ebbing of the recent turmoil in the banking sector has shifted investor attention back to the threat of further interest-rate increases by the Federal Reserve. The tech-heavy Nasdaq fell 0.5%, the S&P 500 and the Dow Jones ended mildly in the red. The benchmark 10-year Treasury yield rose to 3.58% from 3.527% on Monday. Many investors speculated earlier this month that the high-profile failures of SVB Financial and Signature Bank would test the Fed's resolve in its efforts to fight inflation. However, easing anxiety about global banks is leading them to renew bets that interest rates could rise further and stay elevated.
The markets will closely follow global cues in absence of domestic cues in a truncated week. The Indian markets will be shut tomorrow on the occasion of Ram Navami. Automobile stocks will remain in limelight ahead of the March volume numbers. Brent crude prices rallied further overnight wiping out the losses of past 2 weeks. Rising yields in the US, higher crude prices along with the prospect of a below normal monsoon could act as headwinds for the Indian markets.