Market continues to reach new highs as investor confidence rises

Markets in other parts of the Asia-Pacific region were largely higher as the Nikkei in Japan and the Kospi in South Korea were up 1.5% each.

According to Milind Muchhala, Executive Director, Julius Baer, ​​US markets continue to rally strongly due to the hardening of US bond yields in Indian markets, concerns at the peak of growth and building up of inflationary pressures coupled with sharp growth. in energy cost. “We are seeing small intermittent corrections within the market at the regional level, rather than at the headline index level. The domestic sentiment is clearly being supported by the various measures being taken by the government to address some impending issues in various sectors,” he said.

Muchla said any disappointment in the September quarter earnings could lead to some intermittent volatility.

Investors will be curious about the company’s results and outlook for the rest of the year in the coming weeks to see if earnings growth justifies the share-price gains during the blazing stock-market rally this year. Higher cost of raw materials including fuel and shortage of products like computer chips are expected to reduce profit margins in the second quarter of the financial year. Corporate earnings in the three months ending September are likely to be led by select sectors supported by an improvement in domestic demand, highlighting the economic recovery post covid has been uneven despite the second wave of easing of lockdown restrictions.

India’s volatility index or VIX ended 2.06% lower at 15.77 on Thursday, indicating that investors are not anticipating any serious market correction.

“The bulls remained in charge of Dalal Street amid volatility, setting the stage for the festive season. While there are not many negative triggers, macroeconomic trends continue to correct month-on-month. The markets are clearly in a festive mood and we are seeing rapid sector rotation in the game,” said Siddharth Khemka, Head-Retail Research, Motilal Oswal Financial Services Ltd.

However, rising crude oil prices remain risky for equities. Oil prices are up about 14% so far in October, with crude at $83 a barrel.

“Rising energy prices could pose a risk to growth – inflationary dynamics. However, we believe some offsets may be provided by improving demand conditions and reducing macro risks. This in energy prices.” Growth, particularly oil, has prompted concerns of higher inflation, slower growth and whether it could lead to disruptive monetary policy tightening,” said Morgan Stanley.