Sectoral Equity Indices & Market Analysis

Research Presentation - Contents Classification - Restricted ■ US Interest rates continue to rise as Inflation and other key macro data remains strong, while steady fundamentals, expectations of Fed Pivot and bottom fishing led to strong rally in the US markets ■ Europe continues to struggle with stagflation and high energy costs, on the back of ongoing Russia-Ukraine Conflict ■ Chinese market correct as Xi Jinping reappointed for third term... while the economy continues to falter ■ Industrial commodity consolidating but Energy prices remained elevated...While Agri commodities saw mixed trends ■ Multilateral agencies expect weak global growth going forward, driven by tightening monetary conditions...While India would still be one of the fastest growing economies in the world ■ While most EMs currencies weakened.... Equity markets rose tracking similar movement in the developed markets ■ Indian markets remained positive in October on the back of strong DII flows, stable macros and revival in FPI flows... ■ Sectoral equity indices - Performance and FPI flows for October 2022 ■ Domestic macro conditions remains strong ....... led by strong Urban demand ■ Rural India is seeing signs of improvement with high crop prices, rising MSP and lower MGNREGA demand.... Low acreage in some crops could lead to better realisation going forward. ■ Strong corporate and Banks Balance Sheets and rising capacity utilisation creating condition for revival in private capex... ■ Q2FY23 earnings season started on mixed note... Topline growth remained steady but margin impact has led to weak profitability ■ While India's GDP growth / Earnings estimates have been downgraded, any uptick in growth trajectory could support equity market performance... ■Market Round up - October 2022 ■ Key concerns to watch out .... ■ Sectoral rotation has been the trend in last one year.... Sectors like Banking, Auto and Infra seems to be generating alpha in the near term. ■Largecap vs Midcap ■ Fixed Income Market ■ High Inflation - Low Growth The World is starting to be divided between controlling Inflation and Driving Economic Growth... ■ Monetary Policy Tightening continued with inflation rates surging to multi-decade highs... ■ Domestic bond yields remained volatile and traded with an upward bias... ■ Retail Inflation Continued to Surge in September 2022.. While WPI has started to show some deceleration led by consolidation in commodity prices ... ■ RBI is also likely to remain focused on controlling inflation... ■ Declining Forex Reserves amidst strengthening US Dollar remains a key monitorable for Bond Markets... " Banking system liquidity remained in Deficit mode for most part of October 2022... ■Rising credit growth and G-sec supply may continue to exert upward pressure on shorter end of the yield curve... ■ Yield Curve flattened further as the short term yields continued to rise amidst negative banking liquidity... 4 Confidential/Restricted HDFC BANK HDFC BANK RESEARCH We understand your world Classification - Restricted

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