Equity and Debt Market: Last Friday, India increased its interest rate by 50 basis points ahead of a 180-basis point increase in 2022.
Although there have been three rate hikes in a row, the RBI has maintained its retail inflation prediction for the fiscal year 2022–23 at 6.7%, prompting economists to warn investors that rate increases will likely continue. On the equity and Debt Market, it would also have a divergent effect.
Due to the fact that bond markets expected a softening of upcoming rate increases by the RBI, they would now concentrate on issuance from G-secs. It remains stated by a source that fixed income investments remain staggering.
Conversely, since rate increases have fully priced in, stocks may continue to rise.
Rate increases have already been factored in, and the absence of a bad surprise from the RBI has encouraged investors, according to Axis Securities officials. The world’s markets have recovered from short positions. The positive outlook remain supported by increased client engagement boosting indices, a strong Q1, declining crude oil prices, a decline in the value of the rupee, and positive FPI flows.
Analysts place their bets on banks among the stocks that susceptible to interest rate changes from an investment standpoint.
According to the source, Head of Research at Reliance Securities, rate increases may have a detrimental effect on the real estate market and may cause a slowdown in demand; nonetheless, he continues to be positive about banks and anticipates increased margin and profitability in the BFSI sector.
From a technical standpoint, rate-sensitive companies like SBI, DLF, Bajaj Auto, and Manappuram Finance are looking to gain 10–14%.
As well as monitoring July’s retail inflation data, the markets will respond to the final round of corporate earnings this week. On account of the Muharram holiday, markets will close on Tuesday.