Market Outlook May’22

The last couple of months have been highly volatile due to many factors combined including Geopolitical tensions between Russia and Ukraine, Interest rate hikes as a result of Runaway Inflation globally, etc. Here’s a snapshot of the economic, investment and portfolio indicators from our Research Desk to help you understand your investments better.

Macroeconomic factors:

At 6.07 percent, CPI inflation is outside the RBI’s flexible inflation targeting band of 2–6 percent. However, this does not constitute a failure as the MPC is deemed to have failed in meeting its inflation mandate only when average inflation is outside the target band for three consecutive quarters.

Equities:

There may be higher than usual volatility in the short term as market sentiment is likely to be influenced by the ongoing Russia-Ukraine conflict, higher inflation/commodity prices & rate hikes by Global Central Banks.

Fixed Income:

RBI’s Focus has now shifted to withdrawal of accommodation and restoring of liquidity management framework in order to address emanating risks from inflation while supporting growth.

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