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• Indian markets continued to correct in January while the global market staged a sharp recovery driven by China’s re-opening and rising expectations of lower Fed rate increases. FIIs again turned large net sellers in India.
• S&P BSE Sensex & NSE Nifty indices were down 2.1% / 2.4%, respectively, while broader markets BSE Midcap / BSE Smallcap indices were down 2.7% / 2.5%, respectively.
• Power and Oil & Gas were the worst performing sectors, while Banks and Real Estate also saw sharp cuts. Autos and IT were the best performing sectors for the month.

Equity Market Review January 2023

• There were further signs of moderation in inflation in developed markets with US December CPI inflation (released in mid-January) dropping to 6.5% v/s 7.1% in November.
• In this backdrop, the Federal Reserve in its recent meeting on 1st February decided to increase rates by 25 bps v/s 50 bps in December.
• The ECB and the Bank of England, however hiked rates by 50 bps each in their monetary policy meetings in early February.

Debt Market Review - January 2023

• The MPC decided by a majority of 4 out of 6 members to increase the policy Repo Rate by 25 bps to 6.50 per cent
• Consequently, the Standing Deposit Facility (SDF) rate was adjusted to 6.25 per cent and the Marginal Standing Facility (MSF) rate and Bank Rate were adjusted to 6.75 per cent
• The MPC also decided by a majority of 4 out of 6 members to remain focused on the withdrawal of accommodation to ensure that inflation remained within the target going forward while supporting growth

RBI Policy - February 2023