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Daily market commentary 13 July 2022 by Mr. Siddhartha Khemka, Head - Retail Research, Motilal Oswal Financial Services Ltd.

Nifty opened gap up on the back of positive Asian cues, better than expected domestic inflation and IIP data, but soon fizzled out and ended with losses for the third consecutive day. It drifted into red mid-session to close with loss of 82 points (-0.5%) at 15976 levels. Broader market however ended in green with midcap100/smallcap100 up +0.2% each. Among sectors, it was a mixed bag with banks, auto, IT and O&G closing in red while FMCG, metals, Pharma gained.

Global markets were trading weak as investors cautiously await the release of the U.S. inflation report which would guide the future course of action by US Fed. This was despite the strong UK GDP data which grew strongly in the month of May.

Nifty today fell below 16000 level which shows its resistance around this level. Though India’s inflation cooled off a little to 7.01% and IIP grew strongly by 19.6%, but it did little to boost sentiments. Investors are showing  more cautiousness for the US inflation data which is to be released on Wednesday. Further the earnings season has started with weak IT results so far. As we progress further, the health of the earnings performance would become clear and provide some direction to the market. In the meantime, many commodity prices have cooled off 30-40% in recent weeks, thus providing relief to the FMCG sector. Even crude prices fell to below $100/barrel which if sustains is positive for sectors like Paints, FMCG, Cement, Tyre, Aviation etc. Thus we are witnessing sector rotation where in these beaten down sectors are coming back in focus. However rupee is at all-time low which is a concern in the market. Stock specific action is likely to continue as results unfold while Nifty is likely to trade in a range of 15700-16200.

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