All Eyes Now On Inflation Data After RBI Meet

by Dikhyaa Mohanty

India’ equity market ended on a strong note last week despite a weak start due to concern of rising cases of omicron variant. The market then witnessed a sharp recovery, thanks to easing concerns of omicron and dovish RBI policy.

According to the reports, Sensex and Nifty ended last week with healthy gains of nearly 2% to close at 58,786.67 levels and 17,511.30 levels, respectively. Amongst the sector, most indices ended in the positive with realty, metals and capital goods being the top gainers. On the broader market front, midcap and small-cap too ended in the green in the range of 2.1-3%

Further going ahead this week, the decision of the US Fed that is scheduled on 15th December is likely to have a major impact on market movement. Besides this, market participants will keenly watch inflation data and the spread of the omicron variant of coronavirus.

Yesha Shah, Head of Equity Research, Samco Securities, stated that domestic inflation data and the FOMC (Federal Open Market Committee) meeting will be crucial events that will dominate movements in the Indian benchmark indices. Because the RBI provided no guidance on the rate hike timeline, all eyes will be on the stand FOMC adopts on tapering and interest rate hike trajectory. While it is widely expected that the FED will consider the intensity of the Omicron variant before aggressively preponing tapering plans, any surprises in the announcements can cause choppy movements. Thus, investors should remain cautious and consider value investing till the markets continue to let off steam from excess valuations.

Santosh Meena, Head of Research, Swastika Investment, stated that the European Central Bank, Bank of England, Swiss National Bank, and Bank of Japan will also come out with their monetary policies this week. The recently announced US inflation numbers are in line with expectations and it was not as bad as there was fear therefore the market is not expecting any negative surprise from the US Fed.

The US inflation rate rose 6.8% over the last year, the highest increase since 1982, the Bureau of Labor Statistics said recently. Inflation rose 0.8% in November after rising 0.9% in October.Meena added that the impact of the omicron variant on the market has cooled off but the news flows related to omicron may continue to cause some volatility.


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