Domestic Markets Go Through Highs And Lows

Metal stocks rose on optimism that the reopening of the Chinese economy may result in a revival in metal industry pricing and demand.

The start of the fortnight saw a turnaround in Indian benchmark indices, which had been severely dragged down in previous sessions due to global interest rate hikes and the deteriorating corona virus situation. With the release of optimistic economic data, the beginning of the new year was also favourable for the domestic markets. Thanks to reduced food prices, retail inflation for industrial workers declined from 6.08 per cent in October to 5.41 per cent in November. According to the commerce ministry, growth in India’s eight core sectors accelerated to 5.4 per cent in November from 3.2 per cent in the same month last fiscal.

According to the S&P Global India Manufacturing Purchasing Managers Index, manufacturing activity in India climbed to a 26-month high in December, driven by significant growth in production. On the other hand, according to data from the RBI, India’s foreign exchange reserves declined and recorded their second consecutive week of fall. The indices suffered a bloodbath in the last three sessions of the fortnight, with technology stocks bearing the brunt of the damage. As a result, Indian headline indices finished the fortnight down about 1 per cent.

Broader indices, in contrast, outpaced main indices, with the BSE Small-Cap index attracting investors while keeping small-cap bulls busy with robust gains of 2.41 per cent. Fast-moving consumer goods (FMCG) and healthcare sector experienced the least amount of losses, while the BSE Information Technology index had the worst performance over the past two weeks, losing 1.43 per cent. The effects of global macroeconomic pressures were recently observed in management commentary from IT companies. As inflation and recessionary fears grew in the US and European markets, technology companies substantially scaled back on hiring, which is being observed in both major and small IT services companies.

Metal sector emerged as the bestperforming sector of the fortnight with gains of 4.74 per cent. China has begun to soften its virus policy and boost its struggling real estate industry. Metal stocks rose on optimism that the reopening of the Chinese economy may result in a revival in metal industry pricing and demand. In 2022, as a result of the Russia-Ukraine war and the consequent shortages, oil prices have risen.

According to a recent government order, India has hiked the windfall tax on petroleum, crude oil, and aviation turbine fuel from ₹1,700 to ₹2,100 pertonne. Shares of oil and gas companies rallied on the back of upbeat global cues, making the BSE Oil & Gas index one of the best-performing sectors with gains of more than 4 per cent. While DIIs were the net buyers over the past two weeks, FIIs have turned to being net sellers. The FII outflow was recorded at ₹13,575 crore whereas DII inflow was recorded at ₹7,819.03 crore in the past 15 days.