Extending their losing streak into the fifth consecutive session, equity benchmarks the Sensex and the Nifty ended over a percent lower as investors remained worried over elevated inflation, looming rate hikes and geopolitical tensions which seem to have refused to fade away.
In the five consecutive sessions of losses, Sensex has plunged 5 percent while the Nifty50 has come down 4.64 percent. The overall market capitalisation of the BSE-listed firms has dropped to ₹266.03 lakh crore from ₹274.11 lakh crore on April 8, making investors poorer by ₹8.08 lakh crore in just five trading sessions.
The market has a lot of negatives to deal with in the short term. While the Russia-Ukraine war is to complete two months, soaring inflation has aggravated the risk of aggressive rate hikes by the US Fed and RBI. The 10-year bond yields are also rising while the rapid spread of Covid cases in India has added to the worries. Uninspiring quarterly earnings have also dampened the mood further.
"Intensification of geopolitical tension and hyperinflation as crude and metal price rises worried the market. The Indian IT sector continued to lead the downtrend following sectorial headwinds highlighted in weak Q4 results. Quick sell-off was witnessed during the closing hours led by banking stocks due to FII selling as the global market weakened," said Vinod Nair, Head of Research at Geojit Financial Services.
Sensex opened in the green on April 19 and traded with mild gains intermittently before succumbing to the profit booking at the fag end.
The index closed with a loss of 704 points, or 1.23 percent, at 56,463.15 with only four stocks - Reliance Industries (up 3.71 percent), ICICI Bank (up 1.04 percent), SBI (up 0.44 percent) and Bajaj Finance (up 0.25 percent)- in the green.
HDFC (down 5.50 percent), HDFC Bank (down 3.73 percent), Infosys (down 3.55 percent), ITC (down 3.33 percent) and Tech Mahindra (down 3.17 percent) ended as the top laggards in the Sensex index.
Nifty50 closed the day at 16,958.65, down 215 points, or 1.25 percent. In sync with the benchmark Sensex, BSE Midcap and Smallcap indices closed 1.20 percent and 1.21 percent lower respectively.
IT stocks continued bleeding as the BSE IT index closed 2.64 percent lower while the Teck index fell 2.54 percent. FMCG, power, realty and utilities indices also fell over 2 percent each.
Brent Crude traded above the $110 a barrel mark while the rupee fell 24 paise to close at 76.50 per dollar.
"The long-term structure of the Indian market is bullish, however, we are going through a lot of bumps in the short term like geopolitical tension, higher commodity prices, and rising interest rates," said Santosh Meena, Head of Research, Swastika Investmart.
"Inflation is the biggest challenge and if the growth loses track, it could become the biggest sentiment dampener. Some economists are pointing toward global stagflation, a situation of low growth and high inflation, otherwise Indian market is going through a transformation to outperform," said Meena.
"We are bullish on the Indian market for the next 3-5 years despite some global risks, therefore every correction should be taken as a buying opportunity, however, sector and stock selection will be the key in such kind of a market. We are very bullish on economic facing sectors like infra, capital goods, real estate, and banking," he added.
Ajit Mishra, VP - Research, Religare Broking has a cautious stance on the market for the short term as global cues remain unsupportive.
"Weak start of Q4 earnings on the domestic front remains a concern for participants. In the meantime, investors would continue to track updates regarding Russia-Ukraine and currency movement. Investors are suggested to be very selective in picking stocks," said Mishra.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint Genie.
