The markets have remained erratic this week in the absence of a significant mood event, with a furious struggle raging between bulls and bears. The Indian equity market (Nifty-50 Index) gained 2.8% as investors hoped for limited downsides to growth in the current macro environment. Q4FY22 Nifty-50 earnings increased 24% yoy and were 2.5% below KIE estimate. On the economy front, (1) Q4FY22 real GDP growth slowed to 4.1% (Q3FY22: 5.4%), (2) April 2022 GST collections were at Rs1.4 tn (April 2021: Rs1 tn), (3) May 2022 exports increased 15% yoy and (4) May 2022 imports increased 56% yoy. In other economy news, RBI has projected Q1FY23 inflation at 6.3% which is clearly now subject to modification in the upcoming June MPC meet. RBI has already hiked repo rates by 40 bps in a surprise announcement and also indicated that they intend to get the repo rate back to pre-Covid levels. This signals that another hike of about 75 bps is already on cards. Further, other major central banks, including the Fed, have signaled cumulative rate hikes of about 2%-2.5%.

The Sensex was at 56,119 on 3rd June 2022 ending with gain of 2.24% during the week, while the Nifty was at 16931on 3rd June2022 reporting gain of 1.95% during the week. Midcap index underperformed with gain of 1.67% and SmallCap Index outperformed during the week gaining 3.54%. Most of the sectoral Indices ended in green except for Bank Nifty, BSE Pharma and BSE Power.

In the midst of global chaos and conflicts, if there is one thing that is uniting the countries, it is inflationary pressures and following interest rate hikes. This week central banks of various countries have resorted to an increase in benchmark interest rates. In US, investors will be looking ahead to the release of U.S. jobs data for May expected today. Economists see 328,000 jobs added in May, down 100,000 from April, according to a Dow Jones survey. Consensus estimates call for wages to rise by 0.4%, a faster pace than April’s 0.3% increase.The Organization of the Petroleum Exporting Countries (OPEC) and allies including Russia, known as OPEC+, agreed to raise output by 648,000 barrels per day (bpd) in July and 648,000 bpd in August.Russia’s onslaught in Ukraine is also front and center, as well as the recent EU announcement of a partial ban on Russian oil imports.