Below is the Daily Market Commentary 14th September 2021 by Mr. Siddhartha Khemka, Head - Retail Research, Motilal Oswal Financial Services
Equity markets opened gap up after witnessing a pause in its rally over last few sessions and made fresh highs. However, minor selling pressure at higher levels and mixed global cues pulled indices off day's high, resulting in minor gains. Nifty/Sensex both ended 25/69 points (+0.1% each) higher to close at new highs of 17,380/58,247 levels. Broader markets, Nifty midcap 100/ Nifty smallcap 100 outperformed; ending with gains of +1.4%/+0.3%. Among sectors, Media surged ~14%, followed by private banks, IT, Consumer Durables, auto, Oil & Gas, PSU Bank, Pharma and realty. While selling was seen in Metals, Financial Services and FMCG. India VIX was down by -3.2% at 13.58 levels.
Global markets continue to show weakness as investors show caution ahead of U.S. inflation data for clues about the U.S. Federal Reserve’s timetable to begin asset tapering amid worries over future growth. Focus is also on the possible passage of U.S. President Joe Biden's USD 3.5 trillion budget package, which is expected to include a proposed corporate tax rate hike to 26.5% from 21%. Oil prices also hit a six-week high as another hurricane threatened to bring heavy rain to Texas and parts of Louisiana that were still recovering from Ida, and as the International Energy Agency forecast a big demand rebound for the rest of the year.
On the domestic side, Indian equities opened gap up and traded in positive territory throughout the session. Stock-specific activity remained high. Zee Entertainment rallied higher as shareholders sought to revamp the board at an AGM later today. Telecom stocks gained on reports of telecom relief package. On the macro front, WPI rose to 11.39% in August’21 vs 10.8% MoM. The rise in inflation was primarily due to rise in prices of non-food articles, mineral oils; crude petroleum & natural gas; manufactured products like basic metals; food products; textiles; chemicals and chemical products etc as compared the corresponding month of the previous year. IndusInd bank, HCL Tech, Hero Moto, Adani Ports, and Tata Motors were top gainers. While Ultratech, HDFC, BPCL, Nestle, Tata steel were top losers.
The market might consolidate for some time on account of fragile global cues. Investors would react to the US inflation data which would be released later today and this would likely set the tone of the market for this week. Valuations too have moved beyond comfort zones and hence could lead to bouts of profit booking and increase in volatility. But the overall sentiment in the domestic market remains positive, supported by improving economic data and positive earnings expectation. Good 1QFY22 earnings delivery has boosted hopes for a solid FY22 with 30%+ projected Nifty earnings growth, on the back of a strong 15% earnings growth in FY21.
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