Stock market today: With two-day gains, markets bled on Wednesday amid investors worried about rising inflation and aggressive policy tightening by central banks. India’s 10-year benchmark return fell marginally to 7.41 percent, from the previous close of 7.48 percent. Asian stocks fell in volatile trading and failed to extend an overnight Wall Street rally, while the Japanese yen hit a new 24-year low against the dollar. The BSE Sensex lost 700 points while the NSE Nifty dropped below 15,400 with the BSE market cap dropping Rs 3.36 lakh crore to Rs 237.27 lakh crore from Rs 240.63 lakh crore a day ago.
Dr VK Vijayakumar, chief investment strategist at Geojit Financial Services, said: “Pull back rallies can be sharp and yesterday was sharp. The important question is: will this continue? There is no economic news except for the softness in crude oil , to support the rally There is no reason for FIIs to change their sell strategy as the dollar remains strong and US bond yields are attractive and expected to rise further The large caps that recovered strongly yesterday are fundamentally strong stocks Therefore, the best investment strategy right now should be to buy these high-quality names in small quantities, on dips.”
Here are the main reasons behind today’s market decline:
Testimony of Jerome Powell
US Federal Reserve Chairman Jerome Powell will begin his congressional testimony later in the day, with investors looking for further clues as to whether another 75 basis point rate hike is on the horizon at the Fed’s meeting in May. July. Concerns that the Fed could continue to raise rates aggressively despite looming concerns about a recession in the world’s largest economy are weighing on investor sentiment. As such, there was some caution among market participants prior to Powell’s testimony.
Weak US futures
US futures are falling as low as 2 percent, pointing to a gap-down start for Dow Jones, S&P 500 and Nasdaq later tonight. While markets such as Japan, China and Australia rose to 0.3 percent lower, those in Hong Kong, Taiwan and Korea fell to 2 percent.
Rupee hits new record low of 78.29
The Indian rupee hit a new all-time low of 78.29 against the US dollar on Wednesday as continued outflows of foreign funds from financial markets, risk aversion in global equities and elevated crude oil prices weighed on the parent currency. The drop comes amid selling of emerging market stocks and currencies ahead of the statement by US Fed Chair Jerome Powell later in the day before Congress. According to currency analysts, the local unit is also hampered by heightened concerns about India’s inflation and current account deficit and high crude oil prices.
Continued weakness of the rupee intensifies foreign outflows. Data showed that the outflow of foreign stocks in June has so far exceeded Rs 40,000 crore, valued at Rs 2,07,195 for the year.
Helpful Technical Perspectives
“Even if US markets ended solidly in overnight trades, weakness in most Asian indices could weigh on domestic benchmarks in early trades. On the other hand, Nifty’s technical charts suggest ‘Bullish Morning Star Candlestick Pattern’. Nifty’s make-or-break support for the day is seen at 15,453 and then good support at the recent low of 15,181 mark.”
“We suspect Bank Nifty is also targeting a significant recovery with the largest support seen at Mark 32,155. However, the upside may be limited by reports of fears the global economy will slow dramatically amid aggressive tightening by major central banks on around the world to contain the record inflation that has shaken sentiment,” he added.
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