Mitul Shah - Head of Research - Institutional Desk, Reliance Securities Ltd.
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 indices 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.
Indian equities ended the week on a negative note as the Nifty fell 1.4% over the week. Broader markets out-performed the main indices as Nifty Mid Cap was flat while Nifty Small Cap was down 0.8%. Sectoral indices ended mixed. Nifty PSE (+0.9%) and Nifty Consumer Durables (+0.6%) were the major gainers while Nifty IT, Nifty Media and Nifty Service Sector were the major laggards which were down 2.3% each.
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. We expect market to remain volatile over near term. 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.
The markets are likely to see gap up opening; SGX Nifty is up 228 points compared to previous spot Nifty closing. Asian Markets are trading in green; Nikkei is up 0.6% while Hang Seng is up 2%.
Source : Equity Bulls