Headline indices the Sensex and the Nifty resumed their downward march on April 22 as weak global cues and concerns over elevated inflation and looming rate hikes kept sentiment fragile.
Weak global cues, a rise in bond yields and the rupee's weakness also weighed on market sentiment. The rupee ended 32 paise lower at 76.48 per dollar while India's 10-year bond yield rose 0.34 percent.
Bond yields have been rising in the US too amid inflation and hawkish US Fed. As per a Reuters report, US Federal Reserve Chairman Jerome Powell on April 21 said that a half-point interest rate increase would be "on the table" when the Fed meets in May and hinted that the Fed may move rather quickly on rate hikes.
Sensex opened at 57,531.95 against the previous close of 57,911.68 and touched intraday high and low of 57,689.86 and 57,134.72 respectively.
Eventually, the index closed 715 points, or 1.23 percent, lower at 57,197.15. The Nifty50 index closed the day at 17,171.95, down 221 points or 1.27 percent. The BSE Midcap index closed 0.71 percent lower while the Smallcap index slipped 0.38 percent.
With this, the market ended in the negative for the week too. Both Sensex and Nifty fell almost 2 percent this week while the midcap and smallcap indices slipped about a percent.
The overall market capitalisation of BSE-listed firms dropped to ₹269.64 lakh crore from ₹272.03 lakh crore on April 13, making investors poorer by ₹2.4 lakh crore during this week.
"The recent trend of the market was due to the release of high inflation data, the uncertainty surrounding Russia -Ukraine peace talks, volatile crude prices and weak quarterly results. Fed chair’s comment of an aggressive rate hike of 50bps by May made investors extra cautious," Vinod Nair, Head of Research at Geojit Financial Services, pointed out.
On April 22, the 30-share pack Sensex witnessed only six stocks - Mahindra & Mahindra (up 0.98 percent), Bharti Airtel (up 0.50 percent), Maruti Suzuki (up 0.35 percent), Asian Paints (up 0.26 percent), ITC (up 0.25 percent) and HCL Tech (up 0.20 percent) - in the green.
SBI (down 3.08 percent), Hindustan Unilever (down 3.06 percent), IndusInd Bank (down 2.94 percent), Dr Reddy's Labs (down 2.86 percent) and Axis Bank (down 2.68 percent) ended as the top laggards in the Sensex index.
All sectoral indices ended in the red with bank, metal and finance indices falling up to 2 percent on April 22.
“This excessively volatile market without any clear direction is being influenced on a daily basis by external and internal factors. The external factor is the erratic movement in the mother market US where the S&P 500 and Nasdaq go up by around 2 percent one day and go down by around 2 percent the next day,” said V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services.
"The internal factor influencing the market is the see-saw tussle between FIIs and DIIs. Both these external and internal factors are erratic now and that's why the market is volatile without any direction," Vijayakumar added.
Shrikant Chouhan, Head of Equity Research (Retail), Kotak Securities observed that the market remained weak during the week, focussing on ongoing Q4FY22 earnings prints and rising global and domestic bond yields.
Markets continued to price in the increasing probability of aggressive rate hikes by the US Fed.
"Federal Reserve Chairman Jerome Powell affirmed the central bank’s determination to bring down inflation and said that aggressive rate hikes are possible as soon as next month. Powell’s statements essentially meet market expectations that the Fed will depart from its usual 25 basis point hikes and move more quickly to tame inflation that is running at its fastest pace in more than 40 years," said Chouhan.
"Along with the rate hikes, the Fed is expected soon to start reducing the number of bonds it is holding. The central bank’s balance sheet now stands at close to $9 trillion, primarily consisting of Treasury’s and mortgage-backed securities," he added.
As per Ajit Mishra, VP - Research, Religare Broking, the market will react to the ICICI Bank numbers in early trade on April 25. Besides, global cues like updates on the Russia-Ukraine crisis, and China’s COVID situation will also remain on the participants’ radar.
"The slide in the Nifty index has faded hopes for a directional move and we may see further consolidation ahead. Amid all, participants should maintain focus more on stock selection and overnight risk management," said Mishra.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint Genie.
