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It turned out to be a disappointing week for the domestic equity market as benchmark equity indices BSE Sensex and NSE Nifty scaled their fresh 52-week lows during the week. Market watchers believe that global growth concerns, ongoing selling by foreign institutional investors and inflationary pressure continued to dampen market sentiment. The 30-share index Sensex nosedived 2,943.02 points, or 5.42 per cent, to 51,360.42 for the week ended June 17. Likewise, the 50-share Nifty index slipped 908.30 points, or 5.61 per cent, to 15,293.50.
Barring Apollo Hospitals Enterprise (up 0.02 per cent), other components in the Nifty index settled the week in the red. With a fall of 14.09 per cent, ONGC emerged as the top loser in the index. It was followed by Hindalco (down 13.49 per cent), Tech Mahindra (down 13.05 per cent), Wipro (down 12.09 per cent), IndusInd Bank (down 11.64 per cent) and Tata Steel (down 11.43 per cent). Titan, NTPC, UPL, Tata Motors, BPCL and TCS also declined between 8 per cent and 10 per cent in the past five trading sessions.
Shrikant Chouhan, head of equity research (retail), Kotak Securities said, “The markets remained sluggish throughout the week as the rate hikes and inflationary pressure continued to be a major drag. Theoretically, demand-side issues are tackled by the central bank through monetary policies while, the supply-side ones, are via the government’s fiscal measures. However, in the real world when there is a crisis, its cascading effects are felt across borders, sectors, and segments, and more often than not, a combination of fiscal and monetary policies are implemented.”
“Markets also reacted to increased risks of a global recession as the US Fed was forced to raise interest rates by 75 basis points due to persistently elevated inflation,” Chouhan added.
Sectorwise, the BSE Metal and Oil & Gas indices lost 9.60 per cent and 9.32 per cent, respectively. Information Technology, TECk, Consumer Durables, Telecom, Power and Realty indices slipped between 5 per cent and 9 per cent. Other sectoral indices on the exchange also ended the week in the red.
Meanwhile, India’s WPI-based inflation rate rose to the highest level in the current 2011-12 series at 15.88 per cent in May 2022 as against 15.08 per cent in April, also spooked the sentiment at Dalal Street.
Prashanth Tapse, vice president (research), Mehta Equities said, “The 10-year US Treasury yields skyrocketed to 11-year high at 3.48 per cent and the market participants suspect a shot till 4 per cent by end of 2022. The fact that the Fed has stepped up to raise rates faster, the street suspects the RBI will have to catch up with the hawkish Fed.”
In the forthcoming week, market participants will be eyeing the foreign exchange reserves data to be announced on June 24. Meanwhile, the trend in investment by foreign institutional investors and the movement of the rupee against the dollar will also be closely watched by the investors next week.
Meanwhile, PSBs stocks will be in focus as finance minister Nirmala Sitharaman is all set to evaluate bad loans of Rs 100 crore or more in a meeting on June 20. Also, the government will take look at business performance, credit growth and capital raising plans.
Commenting on the further market movement, Yesha Shah, head of equity research, Samco Securities said, “The S&P 500 and our banking index have officially entered the bear market territory and the fear witnessed this week is expected to continue. The movement of the dollar index, crude oil prices and the evolving Covid situation in China and India will be closely watched. As there are no other major domestic or international macro events in the coming week, Indian indices are expected to be jittery, moving in tandem with the global peers. Investors should therefore remain cautious and begin making small, selective investments in fundamentally superior companies that are available at reasonable valuations.”
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