Weekly Market Insights: Markets break 4 week gain streak

Markets broke the rally this week. Markets ended the week lower upon Fed's announcement of a possible rate hike in 2023. Earlier, Fed had said they would not increase rates until 2024. Fed has reduced its timeline for increasing rates due to the high inflation numbers released last month.  

Low rates signal a positive for equity markets as they mean lower interest cost of borrowing for leveraged companies which leads to higher margins, earnings and growth.

Midcaps and smallcaps are usually the most benefited by low interest rates as they tend to be more leveraged and can grow faster if they can borrow money for cheaper. This is the reason why possibility of rate hikes usually cause higher volatility in small and midcaps than large caps.

Most key sectors fell led by metals. Real estate companies which are highly leveraged and heavily dependent on interest rate movement also saw significant correction.

Mutual Fund Industry Highlights

1. MF data for the month of May shows addition of 3.85 lakh new investors. Equity funds saw a net inflow of Rs 10000 crore while debt funds saw a net outflow of Rs 44,500 crore mainly from liquid and overnight fund redemptions.

2. 815 new distributors were added to the industry last month.

NFO's currently open

• BOI AXA Bluechip Fund
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