Home / Markets / Stock Markets /  Fears over Fed, tremors in Taiwan rattle markets

Fears over Fed, tremors in Taiwan rattle markets

The Bank Nifty was among the worst-performing indices in India, plunging almost 2% to 38,298. Tata Steel, Asian Paints, Adani Ports, Tata Motors and JSW Steel were the top index losers, shedding 3-4.5% (Photo: Reuters)Premium
The Bank Nifty was among the worst-performing indices in India, plunging almost 2% to 38,298. Tata Steel, Asian Paints, Adani Ports, Tata Motors and JSW Steel were the top index losers, shedding 3-4.5% (Photo: Reuters)

  • Stocks plunge as investors fear hawkishness at Fed’s Jackson Hole symposium
  • Foreign institutional investors (FIIs) turned net sellers for the first time this month, offloading shares worth a provisional 454 crore, according to BSE data

MUMBAI : Stock markets plunged around 1.5% on Monday, erasing 3.9 trillion of investor wealth, as a stronger dollar, fears of hawkishness at the US Fed’s Jackson Hole symposium, and tensions over Taiwan prompted investors to sell stocks.

While the National Stock Exchange’s Nifty index fell 268 points, or 1.51%, to close at 17,490.7, the BSE Sensex fell 1.46% to close at 58,773.87. The rupee weakened 9 paise to 79.87 a dollar. The Dow Jones index traded 1.2% lower at the opening, signalling rising risk-off sentiments.

Down Time
View Full Image
Down Time

The Bank Nifty was among the worst-performing indices in India, plunging almost 2% to 38,298. Tata Steel, Asian Paints, Adani Ports, Tata Motors and JSW Steel were the top index losers, shedding 3-4.5%.

Foreign institutional investors (FIIs) turned net sellers for the first time this month, offloading shares worth a provisional 454 crore, according to BSE data.

Till 19 August, they had purchased shares worth 46,000 crore, after being net sellers of 56,338 crore during the fiscal year.

“Consolidation was triggered in the market in anticipation of tighter monetary policy by the Fed and worries over a slowdown in global economic activity," said Vinod Nair, research head, Geojit Financial Services. “The current risk-reward is not favouring investors as the Nifty50 is now trading at a premium valuation of 21.5x P/E (one-year forward basis), above the long-term average. The rising dollar index and higher US 10-year bond yield act as the near-term headwinds for the market," he said.

Monday’s decline was the second straight loss after Friday when the Nifty fell to just eight points shy of 18,000.

Opinions were mixed on where the markets could be headed next. While some expected a consolidation within a narrow range until a fresh breakout or breakdown, others said the trend has reversed after a 17% rally from the mid-June low of 15,183 to 17,992 on 19 August.

“Leading indicators like relative strength index showed we were overbought, and a correction was due after the sharp rally," Rajesh Palviya, vice-president of research at Axis Securities Ltd, said. “The correction could extend to 17,300, after which the market could consolidate between that level and 17,800."

However, Rohit Srivastava, a technical expert at IndiaCharts, said the correction has signalled a “trend reversal". He expects the Nifty to test the 15,183 low of June over the next couple of months.

“Seldom have we seen an over 80% retracement of the fall; it didn’t happen during the 2008 market crash either," Srivastava said, citing the correction from the record high of 18,604 on 19 October last year through 15,183 on 17 June this year, and the subsequent rally to the high of 17,992 on 19 August, is an over 80% retracement of the fall from October to June.

Apart from the Nifty not being able to break the psychological mark of 18,000, the inability of the broader Nifty 500 to break its January high of 15,795 and the April high of 15,478 also signalled a correction was in the offing.

Know your inner investor Do you have the nerves of steel or do you get insomniac over your investments? Let’s define your investment approach.
Take the test
Catch all the Business News, Market News, Breaking News Events and Latest News Updates on Live Mint. Download The Mint News App to get Daily Market Updates.
More Less

Recommended For You

Trending Stocks

×
Get alerts on WhatsApp
Set Preferences My ReadsWatchlistFeedbackRedeem a Gift CardLogout