Informist, Monday, Aug 29, 2022
NEW DELHI – Domestic equity indices ended lower today as investors fretted over concerns about an impending recession in the US after Federal Reserve Chair Jerome Powell reinforced a tough stance on the continuation of steeper rate hikes.
In his speech at the Jackson Hole Economic Symposium after market hours on Friday, Powell cleared the air around the Fed’s future course of action with a hawkish stance.
“Restoring price stability will likely require maintaining a restrictive policy stance for some time. The historical record cautions strongly against prematurely loosening policy,” Powell said.
The hawkish comments by the Fed Chair increased stakes for the possibility of another 75-basis point rate hike by the central bank in its meeting later this month.
This resulted in investors shunning risky equities in favour of safe haven assets, which lifted US bond yields and the dollar index higher. Consequently, global markets also witnessed a broad-based sell-off.
“With terminal rate expectations in the US topping 4%, we believe that the near-term volatility might increase in equity markets,” said Naveen Kulkarni, chief investment officer, Axis Securities.
Despite ending in the red, domestic benchmark indices fared better than most of their global peers. Key benchmark indices across Japan, South Korea, and Taiwan ended over 2% lower, while those in the US lost over 3% on Friday.
Nonetheless, the domestic market will remain resilient and at worst, can stay in the consolidation phase for some time, until the dust settles, said Aishvarya Dadheech, fund manager, Ambit Asset Management.
Both indices opened over 2% lower today but defensive buying across the consumer goods space lifted them to end off their day’s lows.
The Nifty 50 fell to a low of 17166.20 points but recouped some losses to end 1.4% lower at 17312.90 points. Correspondingly, the 30-stock Sensex ended 1.5% lower from the previous close at 57972.62 points after it hit an intraday low of 57367.47 points.
Both the indices ended at their lowest levels in a month.
The sharply lower open for the Nifty 50 also triggered a sharp jump in the “fear-gauge” India VIX, which tested a one-month high of 21.2050 points today. The index ended 8.8% higher at 19.8225 points.
The weakness in domestic equities and the dollar index at a 20-year high also weighed on the Indian rupee. The Indian rupee depreciated further against the US dollar and hit a record low of 80.1250 earlier today.
Information technology stocks witnessed a sharp sell-off due to concerns that steeper rate hikes will hurt economic growth in the US and force clients to cut down their digital spending. IT stocks were the worst hit on the Nifty 50 and ended 3-5% lower.
Shares of banks fell 1-4% as Powell’s hawkish remarks gave room for speculation of another rate hike by the Reserve Bank of India at its September policy meeting. The Nifty Bank index ended nearly 2% lower.
The metal pack also faced strong selling as a stronger dollar index and recession fears dented demand outlook for the sector. The Nifty Metal index closed 1.5% lower.
Shares of index heavyweight Reliance Industries also fell over 1% due to lack of any major surprises from Chairman Mukesh Ambani during his address to shareholders at the company’s annual general meeting today. Investors were keen to know the conglomerate’s expansion plans for retail and telecom businesses, a roadmap for the renewable energy business, and succession plans.
Consumer goods companies were the few gainers on the Nifty 50 that rose on defensive buying. Britannia Industries led gains within the pack and ended 1.6% higher.
Selling was less intense within the broader market as all small and mid-cap indices on the National Stock Exchange ended 0.6-1.0% lower.
* Among Nifty 50 stocks, 12 rose and 38 declined
* Among Sensex stocks, 8 rose and 22 declined
* On the BSE, 1,453 stocks rose, 2,048 fell, and 202 were unchanged
* Nifty Metal: Down 1.5%; Nifty FMCG: Up 0.4%; Nifty Realty: Down 1.4%
BSE National Stock Exchange
Sensex: 57972.62, down 861.25 pts (1.5%) Nifty 50: 17312.90, down 246.00 pts (1.4%)
S&P BSE Sensitive Index Nifty 50
Lifetime High: 62245.43 (Oct 19, 2021) : Lifetime High: 18604.45 (Oct 19, 2021)
Record Close High: 61765.59 (Oct 18, 2021) : Record Close High: 18477.05 (Oct 18, 2021)
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: 51360.42 (Jun 17) : 2022 Closing Low: 15293.50 (Jun 17)
2022 High (intraday): 61385.48 (Jan 17) : 2022 High (intraday): 18321.55 (Jan 17)
2022 Low (intraday): 50921.22 (Jun 17) : 2022 Low (intraday): 15183.40 (Jun 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 Vidhi Verma
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