Below is on Weekly Market Outlook 10 April 2023 By Vinod Nair, Head of Research at Geojit Financial Services
It was an encouraging week for the Indian stock market, with a solid upside compared to other EMs which were muted. The release of positive monthly auto sales data, higher-than-expected PMI manufacturing data, strong quarterly bank and NBFC numbers, and cut in windfall tax were the driving factors. Above all, the surprising pause in interest rate hike by the RBI was the game changer. It is expected to have a constructive effect, led by a drop in market yields that encourages both bond and stock prices to rally. The RBI’s hint of a rise in FY24 GDP growth to 6.5% from 6.4% and a drop in inflation from 5.3% to 5.2% was a pro-active direction. Given the upside horizon on domestic growth and a stable financial market, India is expected to have an edge in the performance of equities going forward. We can expect FII inflows to prosper going forward. However, the high level of inflation should meaningfully drop during the latter part of the year, or else the positivity will be lost. FOMC meeting minutes are to be announced next week, which can have an impressive effect on the global market. Investors are looking for signs of a future FED interest rate pause, which can have a positive impact on the global market else vice versa.
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