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Below is Daily Market Commentary 11 March 2022 By Mr. Siddhartha Khemka, Head - Retail Research, Motilal Oswal Financial Services Ltd

Domestic equities consolidated at higher levels after 3 days of strong up move. Nifty opened lower led by weakness in global markets. However it quickly moved towards 16,700 levels and closed with gains of 35 points (0.2%) at 16,630 levels. Stock specific action was seen in broader market which closed with gains of more than half percent. Among sectors, Pharma was top gainer up 2.5%, followed by PSU Bank, Oil & Gas, Energy, Metals, Media and FMCG. While Auto, IT and Media were laggards.

Sentiments turned negative globally as cease-fire talks between Russia and Ukraine failed to make any progress, while US inflation accelerated to a 40-year high in Feb’22 to 7.9%. Thus, suggesting the FED could move more aggressively to curb the inflation. Investors also weighed the European Central Bank's decision to unwind stimulus measures sooner than expected.

Domestic markets reacted positively to the assembly election outcome which favoured the ruling BJP led NDA in 4 out of 5 states. BJP’s comfortable victory would mean continued political stability, policy and reform momentum as well as fading of any risks associated with political uncertainty in an already volatile and uncertain market context.

With election behind, the equity markets will move on to more important aspects in the near term – the Russia-Ukraine geopolitical conflict, the US Fed rate hikes, elevated crude oil prices and the RBI’s response to rising inflationary pressures in the economy. We expect markets to stay volatile until the existing headwinds subside. Valuations though at a P/E ~19x FY23E EPS for Nifty look relatively more reasonable.

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