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Below is Market Quote By Shibani Sircar Kurian, Senior EVP & Head- Equity Research, Kotak Mahindra Asset Management Company

“Equity markets in India and the world over continued to grapple with volatility for the week ended 15^th July 2022. Higher than expected inflation prints in the US, slowdown in global growth and fears of recession are leading to this increase in volatility. US saw its highest inflation in past 40 years with CPI inflation at 9.1% for the month of June 2022. On the back of soaring inflation, the possibility of the Fed raising rates by 100 bps in its next meet on July 26-27^th, 2022 has increased.

On the other hand, India’s retail inflation print eased marginally to 7.0% for the month of June 2022. In past couple of weeks, many commodities like aluminium, copper, crude etc. and agricultural products like wheat, sugar, palm oil etc. have corrected significantly from their peak. This bodes well for inflation trajectory in H2FY23. If this trend continues, it is likely that in the second half of the current fiscal, the focus of the market would shift back towards growth from inflation.

The Indian Rupee however continued to depreciate against US dollar and is trading near INR80/USD mark as foreign investor continue to pull out money from Indian markets. FIIs sold USD 6.4bn worth of Indian equities in June 2022 and USD 0.5bn in July 2022-to-date. With a tenth straight month of selling, FII ownership of Indian equities is now near decadal lows of 17.4%. On the other hand, Domestic Institutional Investors remain net buyers. In order to attract deposits from non-resident Indians and to stabilize rupee, the Reserve Bank of India announced several measures including raising the FCNRB deposit rates.

Going forward, market would keenly watch out for the trajectory of inflation, rate hikes from central banks and growth trajectory in the developed economies. The Q1FY23 corporate earnings season is just beginning and the key to watch out for would be the impact of higher input costs on margins. Monsoons in India are now panning out well across geography and can boost rural income and demand in 2HFY23.”

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