Informist, Monday, Jan 24, 2022
MUMBAI – As investors pulled money out of risky assets while bracing themselves for aggressive policy tightening by the US Federal Reserve, domestic benchmark equity indices witnessed their steepest single-day fall in nearly two months amid a sharp sell-off across sectors. This kept the indices under pressure through the day, with the Nifty 50 slipping below multiple support levels.
At its two-day policy meeting scheduled to begin on Tuesday the US Federal Reserve is expected to give cues on the pace of interest rate hikes. Market participants expect a more aggressive stance, with more than three interest rate hikes in 2022 by the central bank in an attempt to tame sticky inflation.
Further, rumours that long-term capital gains tax may be raised in the upcoming Union Budget for 2022-23 (Apr-Mar) also triggered panic selling by foreign investors, dealers said.
Growing concerns among investors also triggered a rise in US Treasury yields, which rose to 1.78% today after a high of 1.89% last week. Crude oil price also rose in the backdrop of geopolitical tensions across West Asia and eEurope, weighing on sentiment.
Weakness also resulted from persistent selling by foreign institutional investors, who have net cashed out on nearly $1.3 bln worth of Indian equities so far this year, as of Thursday.
Yet another factor denting the market sentiment was margin headwinds owing to higher input costs, largely for consumer-facing companies, which have triggered downgrades on the earnings front. As the earnings were largely below estimates, they failed to justify the expensive valuation for the stocks, resulting in some correction.
The fall in domestic equities also had a bearing on the currency market, as the rupee depreciated further against the dollar. The Indian rupee today closed at 74.5600 a dollar, against Friday’s close of 74.4150 a dollar.
‘Fear gauge’ India VIX rose nearly 27% today to a near nine-month high of 23.9 points, indicating the heightened anxiety among investors.
Eyeing elevated volatility ahead of the Fed’s meeting and due to pre-Budget jitters, earnings announcements and upcoming monthly expiry, Ajit Mishra, vice-president of research, Religare Broking, advised traders to limit leveraged positions and focus on risk management. He recommended that investors use the correction as an opportunity to buy into quality stocks at a good bargain.
Today, the Nifty 50 ended 2.7% lower at 17149.10 points, after hitting the day’s low of 16997.85 points. The BSE Sensex closed 2.6% lower at 57491.51 points after hitting an intraday low of 56984.01 points.
Both the indices ended at their lowest closing levels since Dec 27.
Fears of a high-rate environment that remains unfavourable for growth-oriented stocks triggered further selling in technology stocks, tracking the losses in their global peers. The Nifty IT index ended 3.4% lower and was one of the worst hit among sectoral indices.
Other frontline stocks like Reliance Industries and ICICI Bank also witnessed sharp correction in a weak market despite reporting robust numbers for Oct-Dec. Index-heavyweight Reliance Industries shed a whopping 4%, while ICICI Bank ended 1% lower, pulling the indices further down.
Among other stocks, JSW Steel fell nearly 7% as the company’s consolidated net profit for Oct-Dec came in sharply below estimates due to cost inflation and sluggish export market. Sharda Corpchem was among a handful of gainers, soaring around 20%, as its consolidated net profit for the December quarter more than doubled on year.
The brunt was felt more within the broader market as all major small- and mid-cap indices on the NSE slumped 4-5%.
* Among Nifty 50 stocks, 2 rose, 48 fell
* Among Sensex stocks, 0 rose and 30 fell
* On the NSE, 167 stocks rose, 1,948 fell and 25 were unchanged
* On the BSE, 511 stocks rose, 3,072 fell and 123 were unchanged
* Nifty Media: Down 5.2%; Nifty Metal: Down 4.6%; Nifty IT: Down 3.4%
BSE National Stock Exchange
Sensex: 57491.51, down 1545.67 pts (2.6%) Nifty 50: 17149.10, down 468.05 pts (2.66%)
S&P BSE Sensitive Index Nifty 50
Lifetime High: 62245.43 (Oct 19) : Lifetime High: 18604.45 (Oct 19)
Record Close High: 61765.59 (Oct 18) : Record Close High: 18477.05 (Oct 18)
2022 1st day close: 59183.22 (Jan 3) : 2022 1st day close: 17625.70 (Jan 3)
2022 Closing High: 61308.91 (Jan 17) : 2022 Closing High: 18308.10 (Jan 17)
2022 Closing Low: 57491.51 (Jan 24) : 2022 Closing Low: 17149.10 (Jan 24)
2022 High (intraday): 61385.48 (Jan 17) : 2022 High (intraday): 18321.55 (Jan 17)
2021 Closing High: 61305.95 (Oct 14) : 2021 Closing High: 18338.55 (Oct 14)
2021 Closing Low: 46285.77 (Jan 29) : 2021 Closing Low: 13634.60 (Jan 29)
2021 High (intraday): 61353.25 (Oct 14) : 2021 High (intraday): 18350.75 (Oct 14)
2021 Low (intraday): 46160.46 (Jan 29) : 2021 Low (intraday): 13596.75 (Jan 29)
2020 Closing High: 47751.33 (Dec 31) : 2020 Closing High: 13981.95 (Dec 30)
2020 Closing Low: 25981.24 (Mar 23) : 2020 Closing Low: 7610.25 (Mar 23)
2020 High (intraday): 47896.97 (Dec 31) : 2020 High (intraday): 14024.85 (Dec 31)
2020 Low (intraday): 25638.90 (Mar 24) : 2020 Low (intraday): 7511.10 (Mar 24)
2019 High (intraday): 41809.96 (Dec 20) : 2019 High (intraday): 12293.90 (Dec 20)
2019 Low (intraday): 35287.16 (Feb 19) : 2019 Low (intraday): 10583.65 (Jan 29)
2018 High (intraday): 38938.91(Aug 28)) : 2018 High(intraday): 11760.20 (Aug 28)
2018 Low (intraday): 32483.8 (Mar 23) : 2018 Low (intraday): 9951.9 (Mar 23)
2017 High (intraday): 34005.37 (Dec 26) : 2017 High(intraday): 10515.10 (Dec 26)
Edited by Avishek Dutta
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