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Below is the Daily Market Commentary 17 September 2021 by Mr. Siddhartha Khemka, Head - Retail Research, Motilal Oswal Financial Services

Equity markets opened gap up and touched yet another new highs, before witnessing profit booking in the latter half of the session. The indices settled in marginal red, snapping its three-day winning streak. The fall was more pronounced in the broader markets as it tanked over 1%, thus, underperforming the benchmarks. Sectorally, PSU Bank, metal and realty indices fell over 2% each, reversing strong gains.

Global indices steadied after losses it made earlier in the week, on a strong U.S. retail sales data and hopes that British policymakers are set to consider easing England's Covid-19 rules for international travel allowing those who are fully vaccinated. However, China’s jitters and global growth concerns continue to weigh on investors' minds.

The overall sentiment in the market remains optimistic, given improving macro data points and positive earnings expectation. The PLI schemes announced by the government shows their strong intent to address the sectors’ challenges and pave way for development of local capabilities and capacities, thus enabling companies to rightly capture the opportunity thrown open by China+1 strategy. The constitution of a ‘Bad Bank’ in our view is a positive development as the focus remains on faster resolution of stressed assets, which will improve the balance sheet of Banks. The upfront cash payment would also aid in providing incremental cash flows and will enable Banks to focus more on their core operations. However, valuations are not comfortable and hence could lead to bouts of profit booking. The weak global cues on account of worry over slower economic growth and rising Delta variant cases globally would market oscillating between greed and fear. Nervousness would be seen in the market next week ahead of Federal Reserve meeting, which could provide some indications on when the central bank will start withdrawing its monetary stimulus and start raising interest rates eventually.

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