- The markets have been falling for 5 consecutive trading sessions, FPIs are selling their shares and investors have lost Rs. 18.21 lakh crore in wealth.
- Geopolitical tension in Europe and the Middle East, bearish sentiments amongst investors, fear that the US Fed might tighten its policies are major contributors to this fall.
- The volatility index that measures the market’s perception of fear in the near term went up by a whopping 6% to 18.9 on Friday.
Geopolitical tension in Europe and the Middle East along with bearish sentiments amongst foreign investors have contributed to the slump in the market. India’s benchmark indices logged their worst weekly decline in eight weeks due to losses in technology and financial stocks paired with concerns over inflation and fear of policy tightening by the US Fed.
These worries outweighed the positive factor contributed by the FMCG sector. On Friday, most indices closed in red, except the FMCG sector. The Sensex and Nifty have been falling for five consecutive trading sessions, and the loss recorded was the biggest weekly loss since November 26, 2021. Technology stocks have performed the worst and corporate earnings for the last quarter did not help in the matter.
In his latest weekly note to investors, Christopher Wood, chief global equity strategist at Jefferies, said, “In America, the prime market focus now is with the 10-year Treasury bond yield this week breaking above the perceived 1.8% resistance level. The Fed balance sheet, which should total $8.9 trillion by the end of March, has now become a prime focus for the markets.”
The Sensex fell by 0.72% or 427.44 points to 59,037.18, while the Nifty dropped by 0.8% or 139.85 points to 17,617.15. Some of the top losers were Bajaj Finserv, Tech Mahindra, Tata Steel, Bharti Airtel, IndusInd Bank, L&T, Axis Bank, Bajaj Finance, Infosys, and Dr Reddy’s Lab. Most of them fell by somewhere between 2% to 5%. Hindustan Unilever and Maruti Suzuki were top gainers on the Sensex, up by 2.7% and 2%, respectively.
The Nifty IT index posted its biggest weekly decline since March 2020 as it lost 7% during the week.
The volatility index that measures the market’s perception of fear in the near term went up by a whopping 6% to 18.9 on Friday.
Investors, all over the world have turned cautious on concerns over faster interest rate hikes by the US Fed, rising US bond yields, higher crude oil prices and inflation. Outflows from foreign investors are expected amid less attractive markets that may be a result of higher yields and interest rate hikes.
Nagaraj Shetti, technical research analyst at HDFC Securities said, “Nifty has support near 17,500-17,600 and the market could bounce from these levels. If the Nifty sustains above 17,600 in the coming sessions, it is likely to bounce back to 18,100-18,200.”
The decline in the last four sessions is just a retracement of the uptrend in recent weeks, he added.
The Sensex is trading at 1418 points or 2.4% lower at 57,619 points while the Nifty is trading 2.38% or 418 points lower at 17198. They have been falling since the previous 5 trading sessions and investors have lost Rs. 18.21 lakh crore in wealth, as a result.
“The uncertainty around the quantum of a rate hike by the US Fed is spooking markets the world over and participants expect clarity in the scheduled FOMC meeting outcome on January 26. Amid all, the monthly expiry of the January month derivatives contract would keep traders on their toes,” Ajit Mishra, VP Research, Religare Broking said.
This Wednesday, we have a holiday on account of Republic Day, hence, the domestic market will be shut. This week we have 4 trading days instead of 5.
The markets have also been affected by heightened tensions in the Russia-Ukraine border, which is a major geopolitical concern. FPIs have started to sell heavily.
Among stocks that are a part of the Sensex, Tech Mahindra declined 1.9 per cent to Rs 1,563, Asian Paints fell 2.16 per cent to Rs 3,203 and Bajaj Finserv, Bajaj Finance, Infosys, Wipro, Infosys, and HCL Tech dropped up to 1.8 per cent. Axis Bank and Titan shed 1 per cent each.
Axis bank is about to declare its results today and it is expected that its net profit will be up by 150% to 200% for the December quarter, 2021.
Maruti Suzuki rose by 1.2 per cent to Rs 8,287. IndusInd Bank, ICICI Bank, Power Grid, Reliance Industries and Bharti Airtel added up to 1 per cent.
“Results of RIL and ICICI Bank are very good, reinforcing the current trend of rising profitability of large Indian corporates,” V K Vijayakumar Chief Investment Strategist at Geojit Financial Services said.
