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Daily market commentary 05 December 2022 by Mr. Siddhartha Khemka, Head - Retail Research, Motilal Oswal Financial Services Ltd.

Domestic equities continued with its weakness for the fourth consecutive session, reacting to the RBI policy outcome and on worries of aggressive rate hikes by US Fed next week. Nifty though opened flat, saw profit booking post RBI MPC announcement despite the outcome being in line with estimates. It ended near days’ low at 18560 with loss of 82 points (-0.4%). Even midcaps and smallcaps saw weakness and were down 0.6% each. Except FMCG and PSU Banks, all the counters saw selling pressure.

Market is likely to remain consolidative given the bigger event of US Fed monetary policy due next week. Post the strong services PMI data and the jobs data, investors are worried that the Fed might continue with its aggression for some more time. Sector rotation is being witnessed in the market. Stock and sectors which have run up recently like IT, real estate, Auto, Private banks, metals are seeing some profit booking while the laggard sectors like FMCG, infra, cement are catching up. IT stocks which have seen a sharp run up in the last 2 months could come under pressure in near term. Most Indian IT services companies derive around 30-40% revenues from the BFSI segment, which off late is seeing some weakness. According to news reports, some of the large US and European Banks are planning to lay off people in view lower revenue projection next year.

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