Bears dominated bull in the week gone by with the benchmark equity indices falling more than three per cent amid bets on the US Federal Reserve’s faster rate hikes in 2022. The 30-share BSE Sensex plunged 2,185.85 points, or 3.57 per cent, to 59,037.18 on January 21 against 61,223.03 on January 14. Likewise, the 50-share NSE Nifty index cracked 638.60 points, or 3.50 per cent, to 17,617.15 during the same period.
As many as 45 stocks in the Nifty50 index settled in the red. With a fall of 12.66 per cent, HCL Technologies emerged as the top loser in the index. It was followed by Bajaj Finserv (down 10.29 per cent), Divi’s Laboratories (down 9.47 per cent), Tech Mahindra (down 8.30 per cent), Shree Cement (down 7.54 per cent) and Infosys (down 7.45 per cent).
On the other hand, Hero MotoCorp, Power Grid Corporation of India and Oil & Natural Gas Corporation gained 7 per cent, 3.54 per cent and 1.61 per cent, respectively.
Barring the BSE Power index (up 2.65 per cent), other sectoral indices also settled in the red. The BSE IT, Teck, Telecom and Healthcare retreated between 5 per cent and 7 per cent.
Vinod Nair, head of research, Geojit Financial Services said, “'Weak global sentiments wreaked havoc in the volatile domestic market this week. Rate hike worries amid rising inflation, elevated bond yields, ongoing geopolitical tension and surge in oil prices weighed on sentiments. The UK’s inflation rate rose to 5.4 per cent in December from 5.1 per cent in November owing to rising demand, surging energy costs and supply constraints.”
“Continued FII selling and patchy corporate earnings along with surging Covid cases globally were key factors driving the domestic market,” said Nair.
Foreign Institutional Investors (FIIs) stood net sellers in the equity segment, with gross purchases of Rs 33,196.95 crore and gross sales of Rs 43,844.86 crore, leading to a net outflow of Rs 10,647.91 crore.
The BSE IPO index, which is designed to measure the performance of companies listed at the exchange after the completion of their initial public offering (IPO), also declined over 4 per cent during the week. Newly-listed players including Zomato, One97 Communications (Paytm), Krsnaa Diagnostics and Ami Organics tumbled 14.86 per cent, 14.17 per cent, 11.11 per cent and 10.18 per cent, respectively, during the past five trading sessions.
Yesha Shah, head of equity research, Samco Securities said, “Global counterparts have been experiencing declines for quite some time, and it seemed that our markets are now following the global trend, rattled by rising bond yields and oil prices. The US 10-year treasury yield and India’s 10-year government bond yield have touched their highest levels in two years at 1.90 per cent and 6.68 per cent, respectively. This rise is largely responsible for the impending triggers.”
“This signifies that the markets are pricing in a Fed rate hike sooner than expected. Furthermore, the inflationary woes were worsened when benchmark oil prices soared beyond $89 per barrel, their highest level since 2014. These tremors in the domestic markets are anticipated to persist in the next week as the budget approaches. History suggested that Indian indices have posted negative returns or stayed rangebound in seven of the previous 10 years in the week preceding the Budget," Shah said.
The coming truncated week is expected to be volatile for the domestic equity markets on account of the F&O expiry, which is scheduled to take place on January 27.
Investors for the coming week would be eyeing results from majors ICICI Bank, Yes Bank, Axis Bank, Burger King India, Cera Sanitaryware, HDFC Asset Management Company, SBI Cards and Payment Services, Shemaroo Entertainment, Cipla, ICRA, Macrotech Developers, Maruti Suzuki India, Raymond, Bhel, Laurus Labs, Deepak Fertilisers, Dr Reddy's Laboratories, Kotak Mahindra Bank and Larsen & Toubro, among others.
Meanwhile, the US Federal Open Market Committee will detail its next policy statement on January 26. In December, the rate-setting panel had signalled three rate hikes of 25 basis points each in 2022, as the US central bank seeks to tackle surging inflation in the world’s largest economy.
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