Stock Market News
The market once again retreated from the psychological 18,000 mark on the Nifty50 and 60,000 on the BSE Sensex, falling more than 1.5 percent for the week ended September 16 and wiped out all its previous week’s gains.
Rising fears that the US Federal Reserve may remain aggressive on policy tightening with expectations of 75 basis point rate hike in September policy meeting and a similar hike in November meeting to tame inflation, and recession worries caused selling pressure in the market. Also the cut in growth forecast by Fitch Ratings, selling by foreign institutional investors (Rs 1,920 crore during the week) and correction in IT stocks pushed the market down.
The BSE Sensex during the week plunged 952 points or 1.6 percent to Rs 58,841, and the Nifty50 lost 302 points or 1.7 percent to 17,531 due to correction in the last three days, while the BSE Midcap and Smallcap indices declined 1.5 and 1.1 percent respectively.
“Despite its strong decoupling scenario and encouraging macroeconomic data, domestic bourses succumbed to the global trend of rising bond yields and dollar index as a result of rate hike fears in the global market. Fears of a recession in the global economy exacerbated selling pressure in IT and pharma stocks,” Vinod Nair, head of research at Geojit Financial services, said.
After the release of US inflation data, which showcased a month on month increase in inflation, the global market has been pricing in the likelihood of a more aggressive policy response from the Fed in its upcoming meeting next week, he said.
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The biggest correction among sectors was seen in BSE IT that lost nearly seven percent amid fears of slowdown and recession in western nations. Auto, capital goods, energy, FMCG, healthcare, oil & gas, and realty indices were down between 1.5 and 3 percent. However, banking & finance, power and metal stocks bucked the trend.
The BSE500 also corrected 1.4 percent and more than 65 percent stocks in the index registered negative returns in the week gone by, but the top 10 stocks among the rest of gainers outperformed broader markets, gaining between 10 and 51 percent during the week.
Tata Investment Corporation was the biggest gainer among top 10 stocks, surging 51 percent, while the rest — KRBL, Ceat, Kalyan Jewellers India, Ambuja Cements, India Cements, Bharat Dynamics, ACC, Kajaria Ceramics, and PNB Housing Finance — gained 10-16 percent.
Further, the following rallied seven to nine percent during the week: JK Lakshmi Cement, Vakrangee, Vedanta, EID Parry (India), Nuvoco Vistas Corporation, Maharashtra Scooters, IIFL Finance, Delta Corp, IndusInd Bank, Privi Speciality Chemicals, Poly Medicure, Adani Enterprises, Laxmi Organic Industries, and Mahindra Logistics.
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Going ahead, the market is likely to remain volatile at least till the Fed meeting as well as the Reserve Bank of India (RBI) meeting which are scheduled to be held in second fortnight of this month, experts said.
India VIX, which measures the expected volatility in the market, increased nearly 12 percent to near 20 levels now, making the bears active and bulls uncomfortable.
“Investors are widely expecting an aggressive rate hike next week, with a third of market respondents expecting the Fed to do 100 basis points, whereas a 75 bp hike is mostly discounted. To combat pressure on the rupee, the RBI most likely will have to do at least 50 bp rate hikes soon,” Aishvarya Dadheech, fund manager at Ambit Asset Management, said.
Further to that, the World Bank painted a gloomy picture of world economies heading towards deep recession as central banks across the world hike interest rates to combat persistent inflation. Fitch especially cut India’s economic growth forecast for 2022/23 to 7 percent from 7.8 percent.
“All this fuelled the jitteriness and led to a surge in the Indian market fear index (VIX) above 20 for the first-time after June 2022,” said Dadheech who expects the market to remain volatile in the coming weeks before more cues from the quarterly season land, which begins early next month.
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