Indian indices opened negative on Thursday amid weak global markets. At 9:16 AM IST, the Sensex was down 589.10 points or 1.09 percent at 53499.29, and the Nifty fell 169.30 points or 1.05 percent at 15997.80. About 442 shares have moved up, 1,488 shares have fallen and 65 shares have remained unchanged. Of the Sensex-30 stocks, Bajaj Finance, HDFC Bank, L&T, Titan, Asian Paints, Maruti, Tech M and M&M were the biggest losers, up 2 percent. PowerGrid and NTPC, meanwhile, were the only winners. In the broader markets, the BSE MidCap and SmallCap indices also opened weakly, falling to 1.6 percent.
All sectors in Deep Red
Sector-wise, the PSB index on the Nifty was hardest hit, dropping 3 percent. All other pockets also suffered heavy losses, falling 1-2 percent. Market breadth was also extremely negative with 2,069 stocks falling on the BSE versus 459 in the green. India VIX rose 4.7 percent and was almost 24.
Of the shares, the MRPL gained 5 percent. The ONGC subsidiary reported a more than 11-fold jump in net profit in the fourth quarter of Rs 3,008.18 crore for the quarter ended March 2022, compared to Rs 267.51 crore in the corresponding quarter a year ago.
On the other hand, Birla Corporation fell 5 percent after the company reported a 55.5% drop in net profit to Rs 111.08 crore in the March quarter due to a one-time credit adjustment in income tax the previous year.
Why is the stock market falling today?
Inflation continues to be a major headwind for the markets. US consumer inflation, which hit 8.3 percent in April, bolsters market concerns about aggressive Fed rate hikes and the possibility of a US recession in 2023. With the dollar index at 104 and expected to strengthen, FIIs are likely to continue to sell until Indian valuation becomes attractive. While buying DII is now more than selling FII, that is not enough to boost sentiment in the market as macroeconomic headwinds are strong. The market’s preference for value over growth is reflected in the strength of high-quality banking stocks that are even now at buyable valuations, said Dr. VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services
Policy tightening by central banks
The main reason investors and experts give for the market’s weakness is the Federal Reserve’s policy adjustment. The Fed warned in early 2022 that it was transitioning to tighter monetary policy in a bid to contain rising inflation, signaling a substantial shift in the investment climate.
Mohit Nigam, Head – PMS, Hem Securities, said: “According to the SGX Nifty and Global Trend, the Indian market will open lower. The US stock market was trading lower. Indian markets are seeing turbulent swings as investors continue to worry about rising interest rates, fears of slowing economic growth and additional tightening measures in China.”
Weak global signals
US stocks ended sharply lower on Wednesday, with the Nasdaq falling more than 3 percent and the Dow falling for the fifth day in a row after inflation data failed to allay investors’ concerns about the outlook for interest rates and the economy. The Dow Jones Industrial Average fell 326.63 points, or 1.02 percent, to 31,834.11, the S&P 500 lost 65.87 points, or 1.65 percent, to 3,935.18, and the Nasdaq Composite fell 373.44 points, or 3. .18 percent to 11,364.24.
Tokyo shares fell in early trading on Thursday after overnight falls on Wall Street as investors worried about inflation. The benchmark Nikkei 225 index fell 1.34 percent or 350.51 points to 25,863.13 in early trading, while the broader Topix index lost 0.79 percent or 14.59 points to 1,836.56. The dollar stood at 129.58 yen, down from 130.00 yen on Wednesday in New York.
Hong Kong stocks opened lower on Thursday after falls on Wall Street amid renewed fears of rising inflation. The Hang Seng index fell 1.35 percent or 267.68 points to 19,566.89. The Shanghai Composite Index in mainland China fell 0.45 percent or 13.90 points to 3,044.80, while the Shenzhen Composite Index fell 0.64 percent or 12.33 points to 1,906.18.
What should investors do?
Yash Gupta, Equity Research Analyst, Angel One Ltd., “We are seeing broader selling pressure in the market, mid-caps and small-caps face more selling pressure than the Nifty and Sensex. Selling pressure started following news of the RBI’s rate hike and aggressive commentary from the Fed. We also continue to see FII and DII sales continue to buy, but last month saw a dip in mutual fund inflows. We expect markets to be volatile in the near term depending on both domestic news and foreign markets. We recommend long-term investors to put in 50 percent of the new fund and wait for the market to recover.”
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