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Below is the Daily Market Commentary 11 May 2022 By Mr. Siddhartha Khemka, Head - Retail Research, Motilal Oswal Financial Services Ltd

Domestic indices continued to remain under pressure for the fourth consecutive day amid high volatility. Nifty opened positive but failed to hold at higher zones and drifted below 16,000 zone for a short span. The index recovered well from its intraday low and closed with loss of 73 points (-0.5%) at 16,167 levels. Broader market closed in negative territory with Nifty Midcap 100 down -0.4% while Nifty Smallcap 100 down -3%. Among sectors Realty, Private Bank, Financial Services and Metals ended in green while IT, Auto, FMCG, PSU Bank, Consumer Durables, Oil & Gas and Media ended in red. India VIX inched above 24 zones during the day, leading to wild swings in the market.

Global market bounced back as investors digested China’s inflation data and keenly await US monthly inflation data which will dictate FEDs stance on tightening of its monetary policy. Further, good set of corporate earning numbers supported the overall tone in the market

China’s inflation data showed that the prices have accelerated faster than expected in April, as COVID lockdowns disrupted supply chains. The consumer price index rose 2.1% y-o-y, while the producer price index rose 8% y-o-y.

The changing macro backdrop with heightened worries on rising rate and liquidity tightening is impacting the markets. Meanwhile, the earnings season continues to remain healthy, notwithstanding the challenges on multiple fronts. Nifty has corrected ~10% from its recent high in April. On the other hand midcaps and smallcaps have faced larger selling pressure – falling 13%/17% from their respective highs. Post this correction, Nifty is now trading near its 15 year LTA of ~18x while midcaps are trading in line with the Nifty. The weakness in the market is likely to persist till the concerns subsides. But still this correction has offered the opportunity to accumulate some good quality stocks from long term perspective