Benchmark equity indices BSE Sensex and NSE Nifty extended their losses for the second straight session on Friday amid heavy selling in index heavyweights including Reliance Industries, Adani Enterprises and Adani Ports among others. The 30-share index Sensex traded over 1,800 points down at 59,108 at around 12.40 pm (IST) against the 60,978.75 mark on January 24, 2023. Likewise, the 50-share NSE Nifty index retreated more than 550 points to 17,566 from 18,118 during the same period. Below are the major factors that dragged the Indian equity markets down.
Economic growth projection
Sentiments came under pressure after the United Nations on Wednesday cut down India’s growth forecast by 20 basis points to 5.8 per cent for the ongoing calendar year due to higher interest rates and risks of recession in the developed world weighing on investment and exports. It also projected that global economic growth to slow to 1.9 per cent in 2023 from an estimated 3 per cent in 2022.
So far in January, the selling by foreign institutional investors further weighted market sentiment. They have sold shares worth over Rs 16,500 crore on a month-to-date basis till January 25. They offloaded shares worth more than Rs 1.20 lakh crore in 2022.
Selling in RIL, Adani, banking stocks
Shares of energy-to-telecom major Reliance Industries, which holds over 10 per cent weightage in the Nifty index, also put some pressure on the Indian equity market on January 27. The scrip traded over 2.50 per cent lower at Rs 2,321 in the afternoon trade. In addition, some other Nifty stocks including Adani Ports and Adani Enterprises were also down 17 per cent and 9.18 per cent, respectively. Shares of Adani Group stocks came under pressure after a report by Hindenburg Research on January 24 claiming that the Indian conglomerate had engaged in stock manipulation and accounting fraud scheme over the course of the last few decades. Banking majors State Bank of India, ICICI Bank and Axis Bank also slipped over 3 per cent.
Other investment options
With rising interest rates, there are expectations that risk-averse investors may shift towards fixed deposits and other safe investment options. Meanwhile, gold prices also increased by over Rs 2,200 so far in January to Rs 56903 from Rs 54,656 on December 30 last year.
Market watchers believe that traders also remained on the sidelines ahead of the Union Budget for FY2023-24. Finance Minister Nirmala Sitharaman will present the Union Budget 2023-24 on February 1, 2023. This will be the last full budget of the Modi 2.0 government ahead of the general elections next year.
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