Market extends 3-day losing streak; Sensex erases 61k, Nifty below 18,150
4 min read 22 Dec 2022, 04:21 PM ISTSmallcap stocks were the worst hit in the broader market. All sectoral indices were in red with capital goods, auto, banking, consumer durables, metal, and oil & gas witnessing major selloffs. India's volatility index shed over 2%.
PremiumIndian markets failed to grasp onto gains in global cues as they extended their losing streak for the third consecutive day on Thursday. Sensex has erased the 61,000 mark and Nifty 50 has given away 18,150 levels. Smallcap stocks were the worst hit in the broader market. All sectoral indices were in red with capital goods, auto, banking, consumer durables, metal, and oil & gas witnessing major selloffs. India's volatility index shed over 2%.
Sensex dived by 241.02 points or 0.39% to end at 60,826.22, while Nifty 50 dipped by 71.75 points or 0.39% to close at 18,127.35. During the trading session, the Nifty 50 even tumbled below 18,100 before correcting. Bank Nifty settled at 42,408.80 lower by 209.15 points or 0.49%.
In the broader market, smallcap indexes on both BSE and NSE plummeted nearly 2% each. On BSE, the Capital Goods index dropped over 536 points, while the Auto and Consumer Durables index slipped over 306 points and 308 points. Metal and Oil & Gas index dived around 1% each.
Ultratech Cement, Infosys, Asian Paint, and Kotak Bank were among the gainers, however, the upside was at a slower pace.
The top bears were M&M, Bajaj Finserv, IndusInd Bank, Tata Motors, L&T, Tata Steel, Axis Bank, NTPC, and Tech Mahindra.
S Ranganathan, Head of Research at LKP securities said, “Markets continued their downward journey even today despite a steady opening and absence of data on any new strain other than the sub-variants of Omicron elsewhere."
LKP expert further added,"With the force of gravity reversing on the back of rising interest rates and with PE expansion hard to come along, the street seems to prefer staying a bit light ahead of the new calendar year and earnings season. All sectoral indices ended in the red during today's trade."
On its debut day, Sula Vineyards stock closed at ₹331.15 apiece lower by 7.50% from its listing price, while down by 7.24% from its IPO issue price. The largest wine cellar in India made a flat market debut on Thursday. The company's IPO was launched from December 12 to 14th and received a subscription of 2.33 times by the last day of the public offer. Its IPO price was fixed at ₹340 per share to ₹357 per share.
Also, Vinod Nair, Head of Research at Geojit Financial said, "Positive sentiments from the global markets failed to bolster optimism in the domestic indices. The losses were extended in domestic equities owing to the hawkish comments from the RBI’s MPC minutes, which suggested that a premature pause in rate tightening would be a "costly policy error at this juncture". On the other hand, better-than-expected earnings in the US amid recession fears and strong consumer confidence readings lifted global sentiments."
The performance also comes after RBI's minutes of the meeting for December policy.
Under the minutes of the meeting, RBI discussed a series of risks on both the global and domestic front, while some MPC members also shed light on the need for change in monetary policy stance. RBI hinted that the battle for taming inflation is not over yet and that the central bank needs a decisive slowdown in inflation for policy change. However, the MPC also revealed that the rate hike impact is yet to be felt in the real economy.
Also, as per Dr. Joseph Thomas, Head of Research, Emkay Wealth Management on the markets, the equity market traded lower again mainly on account of the overarching influence of negative factors and news from overseas. Some of the recent macro numbers show the US economy still staying in relatively good health, but the news from China and Japan is not encouraging due to the larger number of covid cases reported from several countries, and the impact of the same on global growth and economic activity in the coming months.
"This factor may be on the mind of the markets, as to how severe the wave of infections would be and how it will be countered," Thomas added.
Further, the Emkay expert added that stocks across market caps and throughout all sectors traded lower with metals, auto, and PSU banks suffering the worst fall. Since countries like India and those in Europe have a much better level of preparedness, the impact may not be too hard this time around, and activity could remain closer to normal."
On the other hand, the Indian rupee gained against the US dollar at the interbank forex market ahead of US GDP data. The local unit closed at 82.7625 against the greenback compared to the previous day's print of 82.81 per dollar. Meanwhile, the 1-year USD/INR implied yield continued its upward trend and jumped by about 7 bps to 2.15%.
On Indian currency's performance, Anindya Banerjee, VP - Of currency Derivatives & Interest Rate Derivatives at Kotak Securities said, "due to year-end, volumes are low and hence we expect the pair to continue to stay rangebound between 82.50 and 83.00 over the near term."
Global markets gained momentum after gas prices eased which bolstered U.S. consumer 12-month inflation expectations to below 6.7% this month -- the lowest level since September last year. This has raised investors' confidence that the US Federal Reserve may take a softer approach in the forthcoming monetary policy.
This month, Fed raised the main interest rate by 50 bps which will be the seventh hike in the current fiscal. The US central bank, however, continued to maintain its hawkish stance and indicated more rate hikes on cards. But easing in US inflation accelerates hope for a softer policy approach ahead.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before taking any investment decisions.
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