Debt Market Outlook- 15th Dec 2022

US Inflation came in at 7.1%, much lower than the market expectations of 7.3% and from the previous month 7.7%. This is 2nd consecutive print lower than expectations. This almost cements a moderated rate hike of 50 bps by the US FMOC scheduled to meet today, down from the past four jumbo hikes of 75 bps. Although the FOMC may indicate a higher peak rate of ~5%, it may not be very market disruptive as long as the rate cycle peaks in early 2023.

Indian headline CPI also surprised positively with a print of 5.88% as against market expectation of 6.3% led by sharp price drop in vegetables. While the core inflation remains sticky at above 6%, CPI print under 6% adds to the sentiment that even MPC may be nearing a peak ofthe rate cycle by early 2023. Additionally, a much stable currency market andthe recent surge in India’s Forex reserves adds safety cushion against global uncertainties.

However, fiscal supply overhang may still continue for some time and the General Budget in Feb 2023 will be keenly watched to get guidance on G-Sec borrowing in FY24.

With expectations of the peaking of the rate cycle in early 2023 and an already elevated yield curve, we believe risk-reward has turned favorable for the debt market with high gross yields and much lesser volatility, especially in up to the 5-year segment considering the almost flat yield curve.

Actively managed, high credit quality debt schemes which are largely deployed across 1-to-5-year segment as a layered approach are suitable placed not only to provide high accrual but also provides the flexibility to capture upside capital gain potential over the medium term by actively managing the duration.

Although WealthReserv attempts to ensure the integrity, correctness, and authenticity of the information, it makes no guarantees whatsoever as to its completeness, correctness, or accuracy. The entire “market data” is sourced from “An external data content agency” and we are not to be held responsible for its “integrity / availability” of the same. The data and information provided on the report is not advice, professional or otherwise, and should not be relied upon as such. Neither the information, nor any opinion contained in this report constitutes a solicitation or offer by WealthReserv to buy or sell any securities, futures, options, or other financial instruments or provide any investment advice or service.

Market Insight 18th Oct 2022

Global recessionary pressure has kept the markets either tangent or range bound for the most part barring the short-lived respite in early September. As expected, the pressures got the better off the domestic markets by October like we had discussed in our last quarterly insight.

Other than the heavy FII selling, depletion in forex reserves due to the rising dollar, widening current account deficit has been fuelled further by our dependency on China for API's (active pharmaceutical ingredients). Given the dodgy Chinese economical conditions, the pharma sector which was one of

n the index a while ago has seen a lot of correction in recent times and we expect this to continue in the short run at least. That leaves a few vacant spots in the leaders of the next surge which may be led by Industrials, Infra and IT.

The other opportunity will lie on how the telecom infrastructure is developed soon to cope with 56 needs, so we may see some new opportunities coming up here too.

With the FED hinting at more rate hikes, markets will be factoring in the impacts in the upcoming weeks along with scores of profit-booking trades which may allow one to buy good companies at cheap or fair prices. As for those already invested, expect to remain patient till December if all your holdings are fundamentally sound or you may need to rejig your portfolios because this is the market that has been and will continue to produce more sector leaders unlike before.

Disclaimer:

Although WealthReserv attempts to ensure the integrity, correctness, and authenticity of the website, it makes no guarantees whatsoever as to its completeness, correctness, or accuracy. The entire “market data” is sourced from “An external data content agency” and we are not to be held responsible for its “integrity / availability” of the same. The data and information provided on the report is not advice, professional or otherwise, and should not be relied upon as such. Neither the information, nor any opinion contained in this report constitutes a solicitation or offer by Wealth Reserv to buy or sell any securities, futures, options, or other financial instruments or provide any investment advice or service.