Last week, on Friday, Sensex closed at 59,959.85 up by 203.01 points or 0.34%. While Nifty 50 ended at 17,786.80 higher by 49.85 points or 0.28%. Upside in heavyweight stocks kept the performance on a positive front with Maruti Suzuki and RIL witnessing strong buying. Auto stocks outperformed counterparts amidst major Q2 results and ahead of monthly sales data. While oil and gas, consumer durables, and energy stocks also contributed to the upside.
Meanwhile, foreign investors emerged as net buyers during the week between October 24 to October 28. FIIs inflows in the equities stood at ₹3,986.25 crore during the week.
On the other hand, at the interbank forex market, the rupee settled broadly flat at 82.47 on Friday against the US dollar. However, the local unit posted a weekly rise in hopes of a reduction in the size of rate hikes from the US Federal Reserves from the December policy.
On the weekly performance from October 24-28, Vinod Nair, Head of Research at Geojit Financial Services said, "The domestic market remained flat with a positive bias during the week as favourable domestic cues were countered by mixed global mood. The US GDP grew by 2.6% during the quarter that ended in September. However, it failed to lift the market as US tech stocks saw a significant sell-off following disappointing quarterly results and a bleak forecast. The ECB raised interest rates by 75 basis points, also signalling that it is making progress in combating record inflation, though the plausibility of a recession grew. The expectation that the central banks would slow down the pace of rate hikes from the beginning of CY23 gave comfort to the global markets. As a result, bond yields across the globe softened, with the US 10yr yield diving below 4%."
What to expect in markets during the week from October 31 to November 4.
RBI last week announced an additional meeting of the MPC to be scheduled on November 3, 2022.
Dr. Joseph Thomas, Head of Research, Emkay Wealth Management said, “The hike in the base rate by the ECB by 75 bps and the likelihood of a rate hike by the hawkish Fed in the FOMC meeting which is scheduled for next week, and the encouraging US GDP numbers are factors that may be of consequence to the markets in the coming week. The special additional meeting of the MPC convened by the RBI for Nov.3, 2002, and the possibility of further rate hikes given the persistent inflation is something that market is pondering over with caution at this juncture. We may continue to see some volatility in the markets as we cruise into the new week."
It needs to be noted that RBI has already hiked repo rate by 190 basis points for the past four consecutive policies – taking the rate to 5.9% currently. The reason behind the hike is to tame inflation which is at multi-year high. India's CPI inflation has stayed above RBI's upper tolerance limit for the past nine months in row. Inflationary pressure has taken a huge dig at global economic growth prospects. Majority experts have factored RBI to continue the rate hike trends for atleast December 2022-end.
Whereas, Shrikant Chouhan, Head of Equity Research (Retail), Kotak Securities said, "global situation continues to remain challenging. Over the next couple of weeks, Indian markets will focus on domestic macro data and quarterly results & management commentary will drive stock-specific action."
In Nair's view, the strengthening rupee, along with a softening treasury yield and decent Q2 earnings results, will support the domestic market in the near term.
According to Mitul Shah - Head of Research at Reliance Securities, the market fears that more rate hikes by the US Fed could again harden US Treasury yields which could further weaken the rupee. The 2QFY23 earning season so far witnessed healthy revenue growth but higher inflationary pressure took a toll on profitability. Inflation continues to remain sticky, both, in the domestic and the US economy. India's growth remains strong and is expected to be one of the fastest-growing economies in the world, while the global recession and downgrading of growth persisted for major economies. The market is looking at US Fed monetary policy meeting scheduled for 2nd November. Commentary on festive demand, inflation outlook, and the rate hike will be keenly watched in the near term.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint.
