Thursday, October 6, 2022
HomeBusinessBloodbath on Dalal Street. Sensex turns negative for the year

Bloodbath on Dalal Street. Sensex turns negative for the year

Indian stock markets fell sharply today, with Sensex dropping more than 1,000 points and turning negative this year. Global equities fell for a third day today on fears of a possible global recession following rate hikes by the Federal Reserve and other central banks to contain inflation. Investors worry that central banks are willing to tolerate a painful economic slump to bring prices under control. At its low for the day, Sensex fell to 57,981.

Under the Sensex 30-stock package, Power Grid fell 7.93%. The other big laggards were Mahindra & Mahindra, State Bank of India, Bajaj Finserv, Bajaj Finance, NTPC, HDFC and IndusInd Bank. Sun Pharma, Tata Steel and ITC were the only winners.

Sensex closed the day at 58,098 points, down 1,020.80 points, while NSE Nifty fell 1.72% to 17,327 points.

“A rise in US 10-year bond yields and a strong dollar index have prompted FIIs to flee emerging markets. A decline in liquidity in the banking system, a weak currency and a current premium valuation have turned the short-term market outlook bearish. Aggressive monetary policy measures by central banks are putting global growth engines in a slowdown mode, while India is currently in a better position with credit growth picking up and tax collection accelerating, current volatility may continue for a while, investors are advised to wait and then watch until the dust settles,” said Vinod Nair, Head of Research at Geojit Financial Services.

The US Fed raised its benchmark rate on Wednesday and said it expected it to reach 4.4% by the end of the year. Central banks in Britain, Sweden, Switzerland and Norway have also raised interest rates.

See also  Foreign Portfolio Investors Invested 14k Crore In August First Week 2022 FPI Investors

“Domestic and international stock markets reacted this week to the Federal Reserve’s decision to raise interest rates by 75 bps. The price of crude oil has remained stable overall, but the Indian currency has depreciated in recent days. For the domestic market, one of the key near-term events to watch out for is the RBI’s upcoming monetary policy,” said Shrikant Chouhan, head of Equity Research (Retail) at Kotak Securities.

The rupee hit a new low today, breaking the 81 mark against the US dollar. Foreign investors have sold USD 152 million worth of Indian stocks this week, after net buying USD 819 million last week.

“The rupee fell to new lows against the US dollar after the Fed raised interest rates earlier this week. Most currencies are under pressure as the dollar continues to gain momentum,” said Gaurang Somaiya, Forex & Bullion Analyst, Motilal Oswal Financial Services.

Financials slumped in today’s sell-off. The Bank Nifty index fell almost 2.5%.

“In the short term, banks should underperform as rupee and bond yields readjust. However, credit growth estimates will be revised upwards, so it is uncertain whether the correction will be deep enough for trading,” said Emkay Global Financial Services.

Indian government bond yields rose for the second week in a row as the aggressive stance of the US Federal Reserve fueled the Reserve Bank of India’s expectations to keep pace with larger and longer rate hikes. The 10-year Indian government bond yield ended at 7.3926%, after closing at 7.3118% on Thursday.

“India’s economic resilience and high-frequency indicators are rock solid. A little later in the year, exports will weigh on growth. Indian markets should outperform, but absolute outperformance is unlikely. 5-7% cut and time correction from the recent Nifty highs of 18,100 is more likely,” it added.

See also  maruti swift cng price announced in india, Maruti swift CNG भारत में 7.77 लाख रुपये में लॉन्च, 30.90 km/kg की माइलेज और खास फीचर्स - maruti swift cng launched in india with price of 7 lakh 77 thousand rupees, see swift vxi and zxi cng mileage

Check out all the business news, market news, latest news events and latest news updates on Live Mint. Download the Mint News app to get daily market updates.

More or less

Subscribe to Mint Newsletters

* Please enter a valid email address

* Thank you for subscribing to our newsletter.

Post your comment

RELATED ARTICLES

LEAVE A REPLY

Please enter your comment!
Please enter your name here

Most Popular

Recent Comments