Markets Take A Tumble
Ninad RamdasiCategories: DSIJ_Magazine_Web, DSIJMagazine_App, Editorial, Market Moves, Market Watch
The modest rally of domestic indices at the start of the fortnight was driven by a decline in the retail inflation rate, an increase in forex reserves and strength in global markets.
A bloodbath on domestic markets evidenced the worsening corona virus scenario and fears fuelled by better-than-expected US economic data, which led to speculation that the Federal Reserve would raise interest rates further
The modest rally of domestic indices at the start of the fortnight was driven by a decline in the retail inflation rate, an increase in forex reserves and strength in global markets. According to data released by the Ministry of Statistics and Programme Implementation, India’s headline retail inflation rate fell to an 11-month low of 5.88 per cent in November from 6.77 per cent the month before. India’s foreign exchange reserves continued to rise and soared for the fifth consecutive week ending on December 9, 2022. According to figures issued by the Ministry of Statistics and Programme Implementation, India’s industrial output, as measured by the Index of Industrial Production (IIP), dropped 4 per cent in October.
The Indian benchmark indices then plunged heavily following the Federal Reserve’s decision to raise interest rates, with the majority of global indices tumbling amid fears of an economic slowdown. A bloodbath on domestic markets evidenced the worsening corona virus scenario and fears fuelled by better-than-expected US economic data, which led to speculation that the Federal Reserve would raise interest rates further. As a result, over the course of a fortnight, the major indices BSE Sensex and Nifty 50 dropped 3-4 per cent. Broader indices took the brunt of the damage, with the BSE Small-Cap index experiencing a sharp decline of over 8 per cent.
As worries about virus cases resurfaced, the majority of healthcare stocks gained dramatically, with BSE Healthcare index suffering the least impact and falling by only 0.5 per cent. Morepen Laboratories, Nectar Lifesciences and Nureca Ltd. were among the healthcare stocks that drew investors with their strong upswings in an otherwise weak market. Despite losing 3-4 per cent, BSE IT and BSE Bankex fared better. BSE Fast Moving Consumer Goods (FMCG) was one of the sectors that were least hit thanks to sugar stocks, which emerged as top gainers and boosted the sector. Sugar stocks skyrocketed after the government announced that the sugar export quota for 2022-23 would be increased.
With losses of more than 8 per cent, BSE Power and BSE Realty were the worstperforming sectors, severely hurting the performance of indices. The cost rise for power generation companies may be observed due to high coal and crude oil prices. Indiabulls Real Estate, Sobha Developers and Godrej Properties wereamong the hardest hit real estate stocks. While DIIs were net buyers over the past two weeks, FIIs have turned to being net sellers. The FII outflow was recorded at Rs 2,812.39 crore whereas DII inflow was recorded at Rs 12,007.28 crore in the past 15 days.
