Post Market views - June 30, 2022 - Reliance Securities

Mr Mitul Shah, Head Of Research at Reliance Securities.

Domestic equities gave up earlier gains recorded in the session towards end and closed lower following negative sentiments. Nifty declined 0.1%, while broader markets under-performed compared to the main indices as Nifty Mid Cap and Nifty Small Cap plummeted 0.9% and 0.5% respectively. Most sectoral indices ended in red with Nifty Metal witnessing the highest plunge at 2% followed by Nifty Auto and Nifty Reality which were down 1.3% and 1.2% respectively. Nifty Bank was the major gainer which was up 0.5%. The Indian rupee was further dragged down in value and touched 79.06 against the Dollar, as U.S crude futures recently hit $118 per barrel. The GST Council concluded its 2-day meeting and approved tax rates on some goods and services, and also removed tax exemptions on some items. Several states have urged the Centre to extended the deadline for GST compensation which ends on June 30. All rate changes decided at the meeting will be applicable from July 18. The GST Council is set to meet again in the first week of August in Tamil Nadu.

U.S. equities ended mix as investors mulled over comments from FED at the European Central Bank's annual economic-policy conference in Portugal. The Dow Jones closed higher by 0.3%, the S&P 500 fell 0.1% and the Nasdaq Composite Index lost 0.03%. 10-year Treasury note dropped to 3.091% from 3.206%, reversing direction after three consecutive days of gains. Recent data from the Conference Board suggested that consumer confidence has been the lowest in June amid concerns of global recession. In the recent G7 summit in Germany the leaders aim to have targeted sanctions on Russia and impose stringent economic costs on the country. The group is likely to undertake measures to bar imports of Russian oil above a certain level and put a ban on imports of Russian gold. PM Modi stated that hostilities in Ukraine must be stopped with the means of dialogue and diplomacy. Moreover, under the Partnership for Global Infrastructure and Investment (PGII) announced by US President Joe Biden, the G7 has committed to invest $600bn by 2027 in several countries including India.

Crop sowing has picked up its pace and could avoid a worsening of food inflation. Monsoons will heavily influence India's economic outlook in the coming weeks. Farmers and the Indian government are banking on the monsoon rains to keep rice production, inventories and food inflation at a manageable level. Moreover, with 1QFY23 nearing its conclusion, investors are prepping for corporate earnings results for the quarter. Interest rate hikes, growing concerns about corporate profits and economic growth continue to impact the sentiments amid global issues of Russia-Ukraine war. While Oil and food input prices have majorly pushed up inflation, commodity prices are showing signs of settling down.