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Below is the Daily Market Commentary 19th October 2021 By Mr. Siddhartha Khemka, Head - Retail Research, Motilal Oswal Financial Services Ltd

Domestic equity opened gap up and continued its positive rally backed by its global peers. It made a new life time high of 18604 in the initial tick but witnessed huge volatility, finally ending the session in red. Broader market underperformed the benchmark with nifty midcap 100 down -2.2% while nifty smallcap down 1.7%. On the sectoral front, except for IT and financial services, all other sectors were in red, with Realty, FMCG PSU Bank and Metals down 2-4%.

Global market turned positive as rally was seen in technology stocks and prospects of solid corporate earnings helped counter concerns about elevated inflationary pressures. Despite data showing China's GDP grew 4.9% YoY in Q2CY21, its weakest pace since the Q3CY20 and weaker-than-expected U.S. industrial production number, it fuelled hopes among investors that central banks won't rush to tighten monetary policy. Europe's energy prices eased as the wind starts to blow and some mild weather forecasts cap demand, but the oil prices continue to hover around 7-year high as OPEC struggles to raise output while several base metals hit fresh record highs, sparking concerns of high inflation.

Festive mood along with further relaxation in Maharashtra continues to cheer the investors and is thus driving the positive momentum. Accelerated demand and good quarterly corporate results have kept the investor’s interest sanguine. However, rising global commodity and energy prices continue to be a cause of worry. In this environment of high bullishness, one need to stay grounded of various risks including valuations. we would suggest investors to remain sector / stock  specific. With lot of heavyweights reporting their numbers this week, it would keep the markets volatile.

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