IGI Logo

Daily market commentary 04 August 2022 by Mr. Siddhartha Khemka, Head - Retail Research, Motilal Oswal Financial Services Ltd.

Domestic equities witnessed increased volatility amid weekly FNO expiry. Nifty opened positive but then fell sharply by more than 300 points from highs after news of China carrying out military drill around Taiwan. However, last hour buying for 3^rd consecutive day, helped index to recover and close flat at 17,382 levels. Broader markets ended mixed with Nifty Midcap 100 up +0.6% and SmallCap 100 down -0.4%. Sector wise it was mixed bag. Pharma, IT, Metals and Consumer Durables were top gainers, while PSU Bank, Realty, Financial Services were top laggards

Global markets too continued to ignore escalating China-Taiwan tensions on the back of healthy corporate earnings and Strong U.S. Service PMI data. Crude Oil prices edged lower, after OPEC+ producers agreed to increase production by small quantity i.e. 100,000 barrels per day in September.

Volatility has increased in the domestic market in the last 3 days. However strong buying at lower levels have helped Nifty to sustain its positive closing for 6-7 consecutive days. This shows the underlying strength in the Indian markets despite increasing volatility as well as escalating geopolitical tensions. After the sharp run up in the last few days, Nifty now trades at 20x FY23 PE, which is above its 10-year average, thus offering limited upside in the near term. RBI’s policy outcome on Friday would be the key event that the market would track. Going forward, it could be a tug of war between domestic and global factors which would determine the market direction.

Above views are of the author and not of the website kindly read disclaimer