India's domestic indices started 2023 on a downbeat note after a decent end in 2022, with Nifty and Sensex losing 1.98 percent and 1.86 percent, respectively, so far in January.
Markets have been on edge due to concerns about the global downturn and the impending recession, and investors are waiting for clarity as more economic data is disclosed in the coming days and the Q3FY23 earnings season gets underway.
Domestic indices experienced losses in six out of the last nine trading sessions, with two of those days seeing indices losing more than 1 percent of their value. The Nifty has fallen roughly 1,058 points from its record high of 18,888 reached on December 1, while the S&P BSE Sensex has lost 3,625 points from a high of 63,583.
Selling pressure was witnessed across key sectors like banking, realty and consumer durables. The Bank Nifty was down about 1,115 points or 2.10 percent to 42,082 in January.
Meanwhile, China ended its zero-Covid policy after nearlythree years, and analysts are anticipating a modest impact on the Indian markets in the short term. Since China is the world's largest consumer of crude oil, reopening the country will also increase oil demand, which will be bad for the Indian market and economy.
As investments and international manufacturing facilities relocated to India in 2022, the country profited the most from a faltering Chinese economy.
FPIs also turned into net sellers in 2023 so far, offloading equities worth over ₹10,000 crore in the first seven trading sessions of January, as per the media reports. This came after a net inflow of ₹11,119 crore in December and ₹36,239 crore in November.
In CY22, FPIs sold Indian equities worth Rs. 1.21 lakh crore, the highest yearly outflow. Before this, the highest recorded outflow was in 2008, amid the global financial crisis, when foreign investors sold Indian equities worth ₹53,000 crore.
However, despite FPIs being net sellers, Indian markets have outperformed their global counterparts, which are largely supported by domestic institutional investors and retail investors. Also, with a 4.32 percent gain in 2022, Nifty set a new milestone by producing positive returns for the seventh consecutive year (CY16-22).
At current levels, 66 percent or 33 stocks in the Nifty 50 index are down in the current month so far, with Bajaj Finserv and Bajaj Finance being the top losers, falling 10.34 percent and 10.29 percent, respectively.
The sharp selling in Bajaj twins can be attributed to Bajaj Finance's lower-than-estimated AUM growth in Q3FY23.
Other stocks, including Bharti Airtel, Titan, Asian Paints, Adani Enterprises, and Coal India, have witnessed losses in the range of 4–6 percent in January.
On the upside, Tata Motors stood as the top gainer in the Nifty50 index, with a return of 6.48 percent. The stock began its upward rally after the company's wholly owned subsidiary Jaguar Land Rover's (JLR) wholesale surged 13 percent YoY in Q3 FY23.
Further, the company witnessed healthy demand for its products, with the order book increasing to around 2.15 lakh units from nearly 2.05 lakh units as of December 2022.
On the other hand, shares of SBI Life Insurance, HDFC Life Insurance, M&M, and Tata Steel have also gained between 4 and 6 percent.
Analysts expect that markets will stay rangebound in the coming weeks, with a focus on Q3 profits, macroeconomic data, and budget forecasts.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of MintGenie.
