Indian stock markets fell sharply today with financials and metal stock leading the losses. The Sensex was down over 700 points when it hit 51,601 at day’s low while Nifty breached 15,500 levels. The broader markets also also under severe selling pressure with BSE midcap, smallcap indices falling over 2%. The rupee also extended losses today, after a sharp fall in the previous session. However, Sensex and Nifty later pared some losses and were down 0.7% and 0.8% respectively.
Here are 10 things to know about today’s market fall:
1) Avinash Gorakshkar, head of research at Profitmart Securities, said: “This fall in the market can be attributed to the combination of these two reasons — Fed changing its stance on interest rate earlier this week and China announcing to use its metal reserves to check metal price rise.”
2) Other equity markets across were mixed as US Treasury yields climbed and the greenback hovered near two-month highs as investors digested comments from the US Federal Reserve. The US central bank’s indication earlier this week that it would raise interest rates sooner than expected has weighed on the markets.
3) Investor also weighed a sharp drop in commodity prices. London copper prices were set for their worst week since March 2020, pressured by China’s plan to sell reserves and a firm dollar buoyed by the prospect of US interest rate hikes. The Nifty metal index was down 3.5% with Tata Steel and JSW Steel down over 4% each.
4) “Most of the positives (easing of COVID-19 restrictions due to fall in daily infections) are already factored in by the market. It still looks to be a buy-on-dips kind of market. So, at lower levels, we might see some buying coming in and that could give a support to the market,” said Gaurav Garg, head of Research at CapitalVia Global Research.
5) Manish Hathiramani, Proprietary Index Trader and Technical Analyst, Deen Dayal Investments, said: “15700 was a crucial support for the index which on a closing basis was disrespected yesterday. This definitely affects the short-term trend of the Nifty. It is also important to note that this break of 15700 has happened on the back of high volumes. There is every possibility the markets correct till 15200-15300. We would need to evaluate the medium-term trend thereafter. The resistance is now at 15800 and any bounce can be used to short the market.”
6) The Indian rupee today fell 15 paise to 74.23 against the US dollar in opening trade on Friday as the US dollar extended gains, a day after the US Federal Reserve surprised markets with its hawkish statement.
7) “Macro signals continue to be mixed. While rising CPI inflation (6.3% in May) is a major concern, the performance of agriculture & advance tax numbers ( up 150% in Q1 FY22) are positives. In spite of restrictions imposed in Q1 the GDP growth in FY 22 is likely to touch 9.5% with above 25% growth in corporate earnings. Even though the market is exhibiting resilience, investors should be prepared for around 5% correction,” said V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services.
8) “From the global market perspective, it appears that markets have digested the mildly hawkish signal from the Fed. The US 10-year bond yield cooling-off from the high of 1.58 % touched after the Fed announcement to around 1.5% now is an indication that stock markets have shrugged off inflation fears for now.”
9) Among the banking stocks, SBI, Axis Bank and Kotak Bank were down between 1.5% to 3%.
10) Countering some of these losses were software services firms Infosys, Bajaj Auto and HUL. Foreign institutional investors were net sellers in the capital market on Thursday as they offloaded shares worth ₹879.73 crore, as per exchange data.
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