Benchmark indices- The BSE Sensex and the NSE Nifty opened gap-down on Friday and lost more than 5% this week led by heavy selling across the board. On average, six stocks fell for every rising stock. This happened after a crash in the US market overnight after rate hikes by the US Fed.
The 30 share index lost ₹5.12 lakh crore as its market capitalization slipped from ₹ 259.64 lakh crore in the previous session to ₹ 254.52 lakh crore. The Nifty 50 however fell by 1.75%, broadly outperforming Asian peers, which were down up to 4 per cent.
The BSE small-cap and mid-cap indices tanked 530 points and 630 points respectively. Consumer durables and IT stocks plummeted by 1041 points and 749 points respectively.
This week, the BSE Sensex has lost 2,882.21 points or 5.00% and is currently at 54,673.03 levels. The NSE Nifty 50 has lost 935.30 points or 5.40% and is at 16,368.60 levels. The India VIX has climbed 4% to 21.11.
Foreign institutional traders were on a selling spree and persistent foreign capital outflows dented investor sentiment. They offloaded shares worth more than ₹ 2704 crores on Thursday as per stock exchange data.
Here are a few factors that weighed on the market:
- Central Bank Actions: The RBI increased the policy rates by 40 basis points along with an increase in the Cash Reserve Ratio (CRR) The Bank of England projected a 10% plus inflation and increased interest rates by 25 basis points. On Wednesday, the US Fed increased its policy rates by a whopping 50 basis points. These factors combined drained the markets of their liquidity.
- Spiralling Oil Prices: Oil prices have been on the rise for a third straight session on Friday. This happened ahead of an impending European Union embargo on Russian oil.
- FPI Outflows: Foreign investors have been net sellers for eight months in a row. However monthly outflows have fallen from a recent peak of Rs 41,123 crore in March. FPIs are net sellers to the tune of ₹ 4857 crores in May so far.
- The LIC IPO: There are concerns about investors pulling out money from the secondary market and investing it in the mega IPO. The issue was already subscribed by 103% by the end of the second day.
“We would stay on the sidelines and would assess the situation for the next two-three days,” said Sameet Chavan of Angel One.
