Wednesday, December 14, 2022

Slowing inflation in the United States raises hopes for a Santa Claus rally

Slowing US inflation raises hopes for Santa Claus rally

 MUMBAI: An inflation reading in the United States that was lower than what analysts expected has given hope to a Santa Claus rally all over the world, including in India. Consumer inflation for November was 7.1% as of Tuesday evening, which was lower than the consensus estimate of 7.3% for October. The number improved investor sentiment, which resulted in a rise of 2.5 percent for the Nasdaq Composite and a gain of more than 1 percent for the Dow Jones index. On the other hand, the SGX Nifty, a derivative of India's Nifty index that is traded on the Singapore exchange, experienced a surge of nearly 1 percent. A popular term for a rally in the stock market leading up to Christmas is a Santa Claus rally.

Samco Securities' Head of Markets Perspective & Research, Apurva Sheth, claims that investors have breathed a sigh of relief since the US CPI for November came in below the consensus estimate and also below the previous reading because this brings us closer to the actual US Fed pivot of interest rates. The head of the Fed had indicated that he might ease up on rate increases. Sheth stated, "This may soon become a reality." In the United States and around the world, we anticipate this to fuel an early Santa Claus rally."

Because mutual funds continue to be net buyers despite receiving a flood of funds from retail investors through the SIP method, the rally in global markets could spread to India. In addition, these institutions are being joined by foreign funds that have net pumped in over Rs 8,600 crore into stocks thus far in December, despite the fact that December is typically a weak month for overseas fund managers.

On Tuesday, the sensex revitalized 403 focuses to 62,533 places and switched a two-meeting of misfortunes. Infosys, TCS, and Reliance Industries all led the rally. According to BSE data, however, selling in stocks like HUL, Maruti, and Tata Steel limited gains to some extent.

The St Nick Claus rally of the following couple of days, in any case, may not gush out over to the following year, somewhere around two driving unfamiliar financiers are demonstrating like that.

During the day, BofA Securities stated that they anticipate a rally of approximately 5% in 2023 due to the valuation of the Indian market and the possibility of a decrease in Nifty company earnings due to factors outside of India. It has set a December 2023 Nifty target of 19,500 points.

Another prominent foreign brokerage firm, BNP Paribas, predicted that the sensex would reach 66,000 points by December 2023, a 5.5% increase from Tuesday's close. The broking house is overweight on China, Hong Kong and Thailand and nonpartisan on India, Korea and Indonesia.

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