Home / Markets / Stock Markets /  Investors get poorer by over 28.85 lakh cr on D-Street in a month. Is there a breather soon?
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Bears continued to push markets off the cliff and Wednesday was no different ahead of major economic data. Stock markets have been knocked down due to a loss of investors' confidence, inflationary pressures, surprise rate hikes, and consistent selling by foreign portfolio investors (FPIs). Notably, investors' wealth has been wiped out to the tune of over 28.85 lakh crore in a month due to extreme volatility in markets.

On Wednesday, Sensex closed at 54,088.39 down by 276.46 points or 0.51%. The benchmark dropped to as much as an intraday low of 53,519.30 before picking up slight momentum in the afternoon trade, however, could not escape the bears.

Nifty 50 ended at 16,167.10 lower by 72.95 points or 0.45%.

On Sensex's closing price of May 11, the BSE market cap stood at 2,46,31,990.38 crore.

On today's performance, S Ranganathan, Head of Research at LKP securities said, "Indices displayed extreme volatility today ahead of the CPI & IIP data this week. While we did see a sharp recovery in Indices during Afternoon Trade, the market breadth was very weak with several stocks in the broader market taking a big knock-on selling pressure as the Small-Cap Index lost 3% today"

In a month, the BSE market cap has plunged by 28,85,190.48 crore. On April 11th, the market cap stood at 2,75,17,180.86 crore with Sensex staying at 58,964.57. With that, in a month, BSE Sensex has dropped by 4,876.18 points.

Both Sensex and Nifty 50 have nosedived by around 8% in a month.

Data given on NSDL showed that foreign investors pulled out money to the tune of Rs17,403 crore in the equity market in 11 days of May - compared to an outflow of 17,144 crore in April. FPIs have been net sellers since the start of this year.

The first quarter of 2022 witnessed some major selloffs by FPIs with March being the worst for the equities market so far in the year. In January, FPIs outflow stood at 33,303 crore in the equities, rising further to 35,592 crore in February and further to 41,123 crore in March.

The government is set to announce the Consumer Price Index (CPI) inflation for April 2022 month, tomorrow along with the country's factory output data for March.

The latest US consumer price index moderated for the first time in eight months, however, stayed near its four-decade highs. As per the Bureau of Labor Statistics, US inflation comes at 8.3% in April 2022.

Dr. V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services said, "Three trends stand out in the ongoing bear phase in the market. One, India is outperforming: while Nasdaq and S&P 500 are down 27% and 17% from the peak, Nifty is down only 12%. Two, large-caps are outperforming mid-and small-caps: Small-cap and Mid-cap indices are down 24% and 17% respectively from the peak while the Nifty is down only 12%. Three, value is outperforming growth."

Vijaykumar added, "Sustained buying by DIIs and retail investors is imparting resilience to the market even when FPIs continue to be in the sell mode. An unhealthy trend in the market is retail investors chasing low-grade cheap stocks."

Vinod Nair, Head of Research at Geojit Financial Services said, "The major determinant for market direction would be the pace of decline in inflation in response to the Fed measures"

"The only sensible strategy in this highly volatile environment is to buy small quantities of high-quality stocks for the long-term and refrain from speculation," Vijaykumar added.

In their technical report, analysts at ICICI Direct said, "We expect the Nifty to hold the 15600 mark and gradually stage a pullback rally towards 17100 in coming months."

Thus, ICICI Direct analysts stated that dips should be attributed to construct a portfolio by accumulating quality stocks in a staggered manner based on following observations: a) Past four week’s corrective move hauled daily and weekly stochastic oscillator in extreme oversold territory (currently at 8 and 16, respectively). In earlier occasions, during CY18-20, after approaching such lower reading below 20, markets have witnessed technical pullback. b) over past two decades, in a secular bull market, barring two instances average intermediate correction in Dow Jones, Nasdaq indices have been around 15% and 25%, respectively. In the current scenario, we expect both indices to stage a bounce from oversold territory as they have already corrected 14% and 28%, respectively, c) The empirical evidence displays that in last 3 cycles of Fed rate hike, despite initial knee jerk reaction post interest rate hike US and Indian equities have rallied over medium term.

Following are the top picks of ICICI Direct going forward:

BFSI - SBI, Bajaj Finserv, Bandhan Bank, and M&M Finance.

Technology & Telecom - TCS, HCL Technology, Reliance Industries, Bharti Airtel, and Persistent Systems.

Capital goods - Siemens, ABB, Ingersoll Rand, Elgi Equipments, and Schaeffler.

Consumption - Asian Paints, Titan, Varun Beverages, Tata Consumer, and Amber Enterprises.

Auto - M&M, Ashok Leyland, Apollo Tyres, Mahindra CIE, and Asahi India.

Infra and Realty - Adani Ports, TCI Express, Phoenix Mills, JK Cement, and PNC Infra.

Pharma & Chemicals - Divi's Laboratories, Laurus Laboratories, Syngene, and SRF.

PSU - Coal India, NTPC, NHPC, Concor, BEL, and Cochin Shipyard.

Metal - JSW Steel, NMDC, and Graphite.

Others - Indian Hotels, Gokaldas Exports, Coromandel Intl, and Tata Chemicals.

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