Stock Market Update: Indian equity benchmarks rose, taking cues from a rally in global stocks on expectations that the Federal Reserve will abandon its ultra-aggressive policy stance today. Lower domestic inflation also boosted sentiment.
The broad NSE Nifty index increased 74.25 points, or 0.41 percent, to close at 18,403.40. The BSE Sensex index increased 248.84 points, or 0.4%, to end at 61,872.99.
Head of Retail Equity Research
“After trading range-bound for the majority of the trading session, the rally picked up speed in the final minutes. Most European and Asian indexes recorded advances, and this had a trickle-down effect on local benchmarks “said Shrikant Chouhan, Kotak Securities’ Head of Retail Equity Research.
Stock Market Update: Inflation decreased
Following a ferocious run on Friday, both benchmarks saw their closing prices decline on Monday after vacillating for the majority of the session between gains and losses as investors took some profits.
Retail inflation decreased to a three-month low of 6.77% in October, from a five-month peak of 7.41% in September, according to data released after the market closed on Monday.
More than 1000 corporations got profits
The Reserve Bank of India bases its monetary policy mostly on retail inflation, thus any reduction in pricing pressures is encouraging for the institution as it battles high inflation and works to simultaneously stimulate the economy.
Additionally, as the nation’s month-long earnings season came to a close on Monday, more than 1,000 corporations announced their quarterly results. Despite the global recession, the majority of them recorded higher profits and signalled better days were ahead, according to Reuters.
Increase of global risk
As a result of weaker-than-expected US statistics, which many anticipate will allow the Fed to raise rates in increments of 50 basis points after three 75-basis-point increases, risk-taking has risen globally in recent days.
That viewpoint was shared by Vice Chair Lael Brainard, who said on Monday that it would probably be “appropriate soon to revert to a slower rate of rises.”
Slowdown in Japan’s economy
The benchmark for European markets, the Stoxx 600, shook even if US market futures pointed to a recovery. In Asia, the Hang Seng benchmark for Hong Kong rose by as much as 3.6%. As a result of an unanticipated downturn in Japan’s economy, Treasury yields decreased, the dollar decreased, and the yen briefly decreased.
The US central bank would likely soon reduce its rate hikes, according to Fed Vice Chair Lael Brainard, who made the announcement one day after Fed Governor Christopher Waller said the cycle’s endpoint was “far off.” However, Brainard emphasised that there was still “more work to do.”
Meeting between Chinese Premier and US President
According to Kristina Hooper, chief global market strategist at Invesco, “it’s clearly a moment to be thinking about a recovery regime unfolding for markets.” she stated on Bloomberg Radio. However, it will take some time before we are sure if this is in fact a turning point for inflation and the Fed can feel much more confident about accelerating the end of tightening.
Meanwhile, there is hope for better ties between the two countries following Monday’s meeting between Chinese Premier Xi Jinping and US President Joe Biden. Beijing had already committed to making measures to relax Covid restrictions and support China’s faltering real estate industry.
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