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Daily market commentary 15 July 2022 by Mr. Siddhartha Khemka, Head - Retail Research, Motilal Oswal Financial Services Ltd.

Domestic equities rebounded after four days of decline in line with global cues. Nifty opened gap up and traded in a range for most part of the day. However, las hour buying helped index to reclaim 16000 mark and close near day’s high with gains of 116 point at 16055 levels. Broader market too ended in green with Nifty Midcap 100 up 0.8% while Nifty Smallcap 100 was up 0.3%.  Apart from IT, Metals and PSU banks all other sectors ended in green. Auto Sector was in limelight after outlook for Chip Supplies from TSMC (Taiwan Semiconductor Company) came positive.

Global markets turned positive as Fed officials favoured 75bps rate hike as compared to a 100 bps rate hike in upcoming policy meeting inspite of inflation coming above expectation. However, gains were limited as China's economy contracted sharply in the second quarter, as GDP fell 2.6% from the previous quarter. Even uncertain political situation in Italy dented sentiments.

Though the markets bounced by ~7% from its recent low, it witnessed high volatility throughout the week. The main culprit was US inflation which soared to above 9% and led to fear of more aggressive 100bps rate hike in next Fed MPC meet and worry of likely recession for US economy. Sharp contraction in China GDP released towards the end of the week, further dampened the sentiments and led to selling in metal counters as the demand outlook weakened. However with Fed officials still favouring 75bps rate hike provided some boost to the market. Even crude prices continue to hover below $100/bbl which is rendering support to few beaten down sectors. On the domestic front, monsoon is progressing well with rains being 13% surplus which can boost rural economy. As the results season gains momentum more stock specific action would be seen in the market. Going ahead, market is likely to continue its range bound movement as the tug of war continues between global and domestic cues.

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