Sensex, Nifty crash amid global rate hike fears — Second straight session of losses
时间:2024-06-25 14:36:52 阅读(143)
Indian equities lost ground for the second straight session on Monday, anxious that global growth would slow sharply amid continued tightening by central banks. The Street also expects more hikes in local interest rates with inflation remaining uncomfortably high.
The benchmark indices – Nifty 50 and BSE Sensex – lost over 1%, dragged lower by metals and banks, as weak global cues weighed on the sentiment. The NSE Nifty 50 index closed down 688 points or 1.51% to close at 17,490.7, while the S&P BSE Sensex gave up 1.46% or 872 points to end the session at 58,773.87. Barring ITC and Nestle India, all Sensex components posted losses.
The two straight sessions of losses wiped out investors’ wealth worth over `6.57 trillion.Strategists at HSBC wrote late last week that the Indian equity market has seen a turnaround, with easing inflationary pressure and a lower risk of steeper US rate hikes. “We see many factors coming together, creating a Goldilocks-like scenario for continued support of the bull run in India. We prefer to position for a continued risk-on rally through a mix of domestic cyclical and growth stocks,” they said.
However, the weakness in the Chinese economy, driven by the troubles in its real estate market, appears to have led to apprehensions that the slowdown could spill over to other economies as well. Also, the recent rally has meant the markets are now a shade more expensive with the Nifty trading at over 21 times estimated one-year forward earnings. As such there were bouts of profit-taking following the rally earlier in August, analysts pointed out. Till August 18, the Nifty had rallied by 4.6%, while the Sensex had put on 4.7%.
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Foreign institutional investors pumped $5.6 billion into Indian equities till August 19, compared with inflows of $618 million in July, data showed. Also, emerging market (EM) funds have increased their allocation to India to 19.7% versus 18.1% in June while trimming the allocation to Chines, analysts at Bank of America wrote.
There was also some concern on corporate earnings for the April-June quarter, which were muted, primarily due to pressure on gross margins amid ongoing geopolitical conflicts and improving supply chain dynamics.
“The topline growth at the Nifty level (ex-financials) was at 3.3% quarter-on-quarter,” analysts at ICICI Securities said, adding that operating profits, however, were down 7.2% quarter-on-quarter.
上一篇:Stocks To Watch- Dr Reddy’s, L&T, Procter & Gamble, Godrej Consumer, TII
下一篇:WTI Crude oil outlook for next week after ending previous week slightly lower
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However, he believes that the impact on the Indian market is going to be temporary since there could be some short-term impact on flows into Indian equity markets. But since the Indian economy is on a strong wicket and will continue to remain resilient.
“Improved fiscal situation, controlled current deficit, stable interest scenario combined with good corporate earnings should lead to limited impact on the Indian bond market and equity market too,” he added.
The midcap and smallcap indices took a bigger knock with the BSE MidCap fell 2.51%, while BSE SmallCap index dived 4.18%. According to Amnish Aggarwal, head, research, Prabhudas Lilladher, the valuations were already high and some correction was expected. “If the situation sustains as it is then further correction can’t be ruled out,” Aggarwal said.
Telecommunication and industrials indices were the top laggards with BSE Telecommunication declining 3.82%, followed by BSE Industrials falling 3.26%. JSW Steel (-2.99%), Tata Steel (-2.52%) and Tata Consultancy Services (-2.44%) were the top losers of Sensex.
Surprisingly, both foreign portfolio investors and domestic institutional investors were net buyers today. While, FPIs net bought shares worth Rs 252.25 crore, DIIs have purchased shares worth Rs 1,111.84 crore, as per provisional data from exchanges.
Calling this a “normal phenomena” Pankaj Pandey, head, research, ICICI Direct said, “I will not really give too much weight to a single day buying figure. Amid concerns of elevated interest rate and geopolitical tensions, in a typical market cycle, 8-10% correction is possible at any point in time.”
The brunt of geopolitical conflict, elevated interest rates and rising crude oil prices was also felt by other Asian- Pacific markets. Jakarta Composite Index lost 1.57% followed by Shanghai Composite Index and PSEi, which fell 1.47% and 0.89%, respectively. Nikkei and KOSPI declined 0.83% and 0.76%.
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