2 min read.Updated: 22 Nov 2021, 03:35 PM ISTLivemint
Indian stock market update: The behavior of FIIs will also be an important factor in the direction of the market and they are still in a mood of selling, say analysts
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Indian stock markets today extended the recent selloff with Sensex falling over 1100 points to settle at 58,465 while Nifty ended 2% lower at 17,416 levels. A sharp drop in heavyweight Reliance Industries and weak global sentiment dragged Indian markets lower. A resurgence of coronavirus outbreaks in Europe and some other regions is weighing on global investor sentiment.
“Current valuations seem to have priced in a fuller earnings recovery rather aggressively. With a large part of the festive and earnings season behind us, there are lesser triggers for an upside versus variety of looming factors to downside risks. From a macro standpoint, increased probability of liquidity rollback and emerging inflationary trends are dampening investor sentiments," said Nirav Karkera, Head of Research, Fisdom.
"Getting closer to today's dip, re-evaluation of the index heavyweight RIL's deal with Saudi Aramco and continued selling pressure on shares of India's largest IPO Paytm are bearing heavy on indices. Most traders are perceiving the current pullback as an indicator for further downside; hence snowballing into a surge in short positions on large counters and broader indices alike. The perception of the moment seems to have also led to many investors taking some money off the table, albeit for a shorter period," he added.
Shares of Reliance Industries or RIL fell 4%, after the company said last week it had decided with Saudi Aramco to reevaluate a proposed $15 billion stake sale in its oil-to-chemicals arm to the Saudi oil producer.
Bajaj Finance was the biggest loser among the Sensex stock with the NBFC stock falling 5%.
Meanwhile, shares of Paytm fell 17% in their second day of trading despite reporting positive data. One97 Communications Ltd., the parent company which owns and operates brand Paytm reported an overall gross merchandise value (GMV) of ₹832 billion (roughly $11.2 billion) in the month of October 2021, the company said as a part of its latest disclosures with the stock exchanges on Sunday evening.
Strong US data is putting pressure on the Federal Reserve to move faster to rein in its ultra-low-rate policies in order to combat rising prices, say analysts. On Friday, analysts at Bank of America projected that the Fed will likely start raising its benchmark interest rate in the second quarter of 2022, two quarters earlier than they had previously forecast.
"Going forward, rising inflationary pressure will continue to haunt global markets as fears of rate hikes will pump out liquidity from emerging markets like India," said Vinod Nair, Head of Research at Geojit Financial Services.
Investors are also waiting to see if President Joe Biden decides to keep Jerome Powell at the Fed's helm. Biden is expected to announce within days whom he will choose for the nation’s most powerful economic position.
On the other hand, shares of Bharti Airtel rose 6% to a record high, after the telecom major announced tariff hikes effective Nov. 26.
Santosh Meena, Head of Research, Swastika Investmart Ltd, said: “The market may remain volatile ahead of the November month F&O expiry and anecdotally expiry is all about momentum where currently it is in favor of the downside. If we talk about the global markets then they are mixed while the rising dollar index is a cause of concern for emerging markets like India. The behavior of FIIs will also be an important factor in the direction of the market and they are still in a mood of selling."
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