| Market Overview



Key Events for the Month of February 2021:

Nifty (+6.6%) had a good start in February as the growth-oriented union budget pushed the index to record all-time high but a sudden reversal in declining Covid cases trend in India and a global sell-off triggered by rise in US treasury yields pulled the bench to close ~6% lower from highs.
Real GDP Growth turned positive at +0.4% in 3Q, missing street estimates slightly. But moderation in momentum was surprising, especially in context of the strong corporate earnings and increase in government spending.
January CPI print fell to 4.06% (4.59% in December) but core inflation remained sticky at 5.65% as health, clothing, footwear, and recreation showed signs of pressure. Transport CPI posed another risk due to high fuel prices.
India's deficit soared from 4.6% of GDP in FY20 to 9.5% in FY21 due to the welfare measures taken to counter the pandemic. An expansionary budget & more transparent accounting led to the FY22 target of 6.8%.
• MPC kept policy rates unchanged while maintaining its accommodative stance with a promise of ample surplus liquidity.
• FII buying accelerated post the budget with net inflows of ~$3bn seen in February (vs net inflows of ~$2bn in Jan). DIIs continued to remain net sellers to the tune of ~$2.3bn.

Market Valuation Indicators

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