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Quote on Market 01 December 2022 By Vinod Nair, Head of Research at Geojit Financial Services.

"The domestic rally since October was triggered when the global market started to perform well after a long period of consolidation in 2022. And got extended when crude & commodity international prices started to fall in November, uplifting India’s corporate earnings outlook. However, shortly, markets will have to digest the Fed & RBI policy meetings in December, which will determine the future trend of interest rates & economic growth. Inflation & interest rates are forecasted to be upbeat in 2023, which will weigh on central bank’s monetary policy and affect the performance of equities. Equities have an inverse relationship with interest rates when on the higher side. India was the best performer in 2022, upgrading the country’s valuation to premium levels. It is highly possible that India’s future performance will be a challenge, being the most expensive market compared to other EMs, which are trading very cheaply today. Hence, there is a risk that India will underperform, while the total performance will depend on the overall performance of the global market, which has to overcome the risk of recession. Other issues which the domestic market will have to overcome are union budget and election, which can have a volatility in the short-term, while long-term vision is strong."

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