Active Stocks
Thu Mar 28 2024 15:59:33
  1. Tata Steel share price
  2. 155.90 2.00%
  1. ICICI Bank share price
  2. 1,095.75 1.08%
  1. HDFC Bank share price
  2. 1,448.20 0.52%
  1. ITC share price
  2. 428.55 0.13%
  1. Power Grid Corporation Of India share price
  2. 277.05 2.21%
Business News/ Markets / Stock Markets/  Indian markets fall less than global peers. Should you buy on dips?
BackBack

Indian markets fall less than global peers. Should you buy on dips?

Indian stock market indices Sensex and Nifty are down less than 1% despite global markets being in a sea of red

Stock market update: Sensex was down 500 points while Nifty held on to 17,900 levelsPremium
Stock market update: Sensex was down 500 points while Nifty held on to 17,900 levels

As Indian stock markets started this current leg of rally from close to 15,000 levels (Nifty) in June, buy-on-dips approach has paid good dividends. With Fed meeting scheduled later this month and global markets seeing a selloff after hot US inflation report, VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services, suggests retail investors avoid aggressive buy-on-dips approach for the time being even though Indian markets continued to outperform global peers. The Nifty was today down 0.8% to 17,900 levels even though global markets were in a sea of red. The Sensex was down nearly 600 points.

“The 4.32% and 5.12% cut in S&P 500 and Nasdaq overnight again reminds us that there is more uncertainty about inflation and growth and more volatility ahead for markets. The worse-than-expected CPI inflation data in the US, despite cooling gas prices, was a surprise. Now the market fears that inflation is getting entrenched and an ultra-hawkish Fed might trigger a hard landing for the US economy. This thinking too, might change when new data emerges," said V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services.

“The 'buy on dips' strategy has been working very well for Indian stock markets for more than a month now. Investors should watch out whether this strategy continues to work. Aggressive buy on dips is better avoided. Wait for clarity to emerge," he said.

"Domestic-economy facing stocks like high quality financials, capital goods, autos, segments of FMCG and telecom are relatively safe now. Global economy-facing stocks like IT and metals are likely to be under pressure," he added.

Prashanth Tapse - Research Analyst, Senior VP (Research), Mehta Equities, said: “With stronger inflation, the US Federal Reserve's hawkish stance could continue in this month's policy meeting, leading to worries of a growth slowdown in key economies. Besides, the US 2-year/10-year yield curve remained inverted at around 33 basis points, which is again a key recession warning."

On Tuesday, US government data showed that the annual increase in CPI had slowed slightly in August to 8.3%, but that prices continued to rise month on month, increasing by 0.1%. The news shook equity markets, where there had been widespread expectations of US year-on-year inflation being around 8%, with a decrease in prices compared with July.

The news has for now dashed hopes of a slowdown in the US Federal Reserve's campaign of increasing interest rates to cool the overheating economy. The Fed has already instituted two consecutive 75-basis-point hikes, and there are widespread expectations it will make a similarly sized increase at its meeting next week.

After Tuesday's data, however, some investors are now predicting the next Fed hike could be by a full percentage point. The dollar, which had earlier this week fallen against its major rivals in anticipation of slowing inflation, surged after the inflation data was released. The dollar's rise is partly because the Fed has moved more aggressively with interest rate hikes than central banks in other major economies.

IT stocks were under pressure today, with Wipro, TCS, HCL Tech and Tech Mahindra down between 2% and 4%.

(With Agency Inputs)

 

Unlock a world of Benefits! From insightful newsletters to real-time stock tracking, breaking news and a personalized newsfeed – it's all here, just a click away! Login Now!

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
Published: 14 Sep 2022, 09:39 AM IST
Next Story footLogo
Recommended For You
GENIE RECOMMENDS

Get the best recommendations on Stocks, Mutual Funds and more based on your Risk profile!

Let’s get started
Switch to the Mint app for fast and personalized news - Get App

Chat with MintGenie