Benchmark Sensex has lost over 6,000 points in a month amid weak Q4 earnings, a surprise repo rate hike and consistent selling by foreign institutional investors (FIIs). On April 4, the 30-stock index closed at 60,611. The index is down 6,247 points or 10.30 per cent since then. The index ended 105 points lower at 54,364 in the previous session.
Similarly, Nifty which stood at 18,053 on April 4 has fallen 1,813 points or 10.04 per cent in little over a month. The 50-stock slipped 62 points to 16,240 on May 10.
In a week, Sensex has lost 4.58 percent or 2,611 points and Nifty has fallen 4.86 per cent or 829 points.
The Indian market has also been affected by global headwinds such as the ongoing Russia-Ukraine crisis. Higher oil prices amid the war have pushed inflation levels to record highs.
Foreign institutional investors (FIIs) have been net sellers in the Indian market this month. They have sold Rs 20,055 crore worth shares in May. In April too, they withdrew Rs 40,652 crore from the Indian market.
Shrikant Chouhan, Head of Equity Research (Retail), Kotak Securities said, "If we go by external factors, there is also no positive for us. Rather US markets have closed at the lowest point of the last 9 months and the 10-year bond yield is quoting above the level of 3 per cent, which is not allowing the market to rebound from any important/crucial support. Technically, we think the market is becoming oversold and most of the major events are over. In the near term, we are expecting a quick pullback from the 54,000/53,500 level. Technology and financial stocks should be on the watch list."
Retail inflation likely surged to an 18-month high to 7.5 per cent in April, largely driven by rising fuel and food prices and staying well above the Reserve Bank of India's upper tolerance limit for a fourth consecutive month, a Reuters poll found.
In March, consumer price inflation (CPI) zoomed to a 17-month high of 6.95 per cent from 6.07 per cent in February. Inflation pushed the Central Bank to raise repo rate and CRR after a period of nearly two years.
On May 4, Reserve Bank of India Governor Shaktikanta Das announced that the Monetary Policy Committee has decided to hike lending rates by 40 bps to 4.40 per cent with immediate effect. The standing deposit facility rate now stands at 4.15 per cent, while the marginal standing facility rate and bank rate stand at 4.65 per cent. RBI also announced a hike in cash reserve ratio to 4.5 per cent from the earlier 4 per cent.
The surprise rate hike battered the equity market with the Sensex crashing 1,306 points to 55,669 and Nifty ending 391 points lower at 16,677.
Pavitraa Shetty, Co-founder&Trainer, Tips2Trades said, "The Ongoing Russia-Ukraine crisis has led to sustained higher oil prices thereby leading inflation levels to record highs. This has led to central banks of the world increasing interest rates across geographies, thereby creating a panic environment leading to the recent sharp sell-off in equities. Technically, markets look weak but a little oversold. Only if BSE Sensex starts closes on a weekly basis above 57,166, we can say the market has bottomed out and should start moving to newer highs. Support remains at 54,150 and crucial support stays at 52,260 levels."
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