Volatility to persist in equity market

Domestic stock indices declined heavily on weekly basis driven by rising inflation and interest rate hikes by global central banks. Upcoming Union Budget also caused volatility in market. Reliance Limited, ICICI Bank, Bajaj Finance, Ultratech Cement, Bajaj Auto reported Q3 earnings during the week. RIL posted a growth of 38% in net profit on yearly basis. ICICI Bank registered 23% yearly growth in NII while 25% yearly rise in net profit. Net profit of Bajaj Finance soared by 85% on yearly basis.

Domestic equity market is expected to remain volatile due to F & O expiry and upcoming Union Budget FY2022-23. This week Cipla, Dr Reddy, Kotak Mahindra Bank, L & T will report Q3 earnings.

FIIs/FPIs have sold Rs. 190 billion in December 2021 and sold Rs. 88 billion in January 2022.

Wallstreet indices corrected sharply last week. Fed’s tighter monetary policy and rise in inflation dampened investor’s sentiment. Netflix earning report disappointed the market. During the week, Dow Jones fell by 4.65%, Nasdaq decreased by 7.54%, and S&P 500 declined by 5.68%.

European indices fell sharply on Friday aligned with global market. Geo-political issues between Russia and Ukraine also impact adversely on the market. During the week, DAX declined by 1.76 % and FTSE lost 0.63%.

Crude oil prices gained for 5^th consecutive week amid supply disruption concerns amid tensions in Eastern Europe and the Middle East. As per US EIA sources, U.S. crude oil stockpiles rose last week for the first time since November while gasoline inventories grew to an 11-month high,

Global Economy

US weekly jobless claims for unemployment benefits rose by 55 thousand from the previous period to 286 thousand in the week ending January 15th, the highest level since mid-October and well above market expectations of 220 thousand. 

Eurozone consumer confidence indicator stood at -8.5 in January 2022, the lowest level since March 2021 and compared with market expectations of -9.0, a preliminary estimate showed.

UK retail sales slumped 3.7% in December, the largest decline since last January and compared with forecasts of a 0.6% drop.