Published on 13/10/2021 5:52:03 PM | Source: Motilal Oswal Financial Services Ltd

Daily Market Commentary 13th October 2021 by Mr. Siddhartha Khemka, Motilal Oswal

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Below is the Daily Market Commentary 13th October 2021 By Mr. Siddhartha Khemka, Head - Retail Research, Motilal Oswal Financial Services Ltd

Domestic markets opened gap up and scaled to new highs as India's retail inflation eased again in September, falling to a five-month low of 4.35%, while the IIP data for the month of August rose to 11.9%. Further, IMF's GDP forecast, which pegs India's growth at 9.5% in 2021 and at 8.5% in 2022, further supported the market bulls. The benchmark indices closed a percent higher, thus maintaining the momentum. Among sectors, auto sector was in lime light as it rose ~3.5% after the news that the TPG plans to invest Rs 7,500 crore in Tata Motors EV arm. Metals too rose 1.5% after China has asked steel mills in more cities in northern China to cut production from Nov. 15 to March 15 next year. 

On macro front, PM launched a ₹100 lakh crore national master plan for multi-modal connectivity that aims to develop infrastructure to reduce logistic costs and boost the economy. The plan aims to lend more power and speed to projects by connecting all Departments concerned on one platform. Also, government has cut customs duty and agriculture cess on the edible oils. It has cut customs duty on crude sunflower oil to nil and cut customs duty on refined sunflower oil to 17.5%.

Global markets recouped early losses but remained mixed bag as investors continue weighing the impact of elevated inflation on the economic recovery from COVID-19 and await corporate earnings reports. China's imports of coal surged by 76% in September as power plants scrambled for fuel to ease the power crunch that is pushing domestic coal prices to record highs and disrupting business activity. The supply outlook for coal worsen after floods in key producing area, with electricity shortages and rationing expected to continue into early next year.

Market continues to remain in upward trajectory as macroeconomic trends keep improving month-on-month. The inflation data was also in line with RBI’s expectations. Therefore, we expect only a gradual normalization in the monetary policy, with the first reverse repo rate hike in either Feb’22 or Apr’22. Market tomorrow would react to the good results reported by all three major IT biggies ie Wipro, Infosys and Mindtree. HCL Tech and Cyient is also likely to report results tomorrow; thus IT sector is likely to be the key focus sector. PSUs are also back in limelight as privatization of Air India is a watershed event given that this has been the 1st privatization after 19 years. GoI has a clear and well-stated intent for other big-ticket size divestments of PSUs in various sectors due to which they would be the biggest beneficiaries. With opening up of the economy we feel PSUs are well placed and offer lot of value comfort as well.


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