The faster-than-expected rise in interest rates by the US Federal Reserve (US Fed) shook global financial markets in early 2022. And now the ongoing war between Russia and Ukraine has lifted commodity prices, with Brent crude oil hitting a 14-year high of $139 a barrel in intraday trade. All these developments have sent the equity markets across the world into a tailspin.
The markets have been unable to sustain at higher levels as a rise in bond yields globally, especially in the US have dented sentiment. Surging commodity prices, especially crude oil that have now hit $70 a barrel (Brent) coupled with inflation woes and fear of sporadic lockdown across major economic hubs back home as Covid cases rise have chased the bulls away. In the short-term, analysts expect the markets to remain volatile as they react to news flow - both from overseas and developments back home. Investors, they say, need to keep a tab on how the US treasury yields move, which in turn will have a ripple effect on how big money moves across developed (DMs) and emerging markets (EMs), including India.
There is a lot of optimism as regards the defence, railway and manufacturing sectors.
TCS, Infosys and Wipro were down 0.4-2% each. Capital goods majors also ended lower with L&T and BHEL down 1.4-3.9% each.
Since 2005, in 8 out of 10 years (except in CY11 and CY14) the benchmark indices have given positive returns in December.
Sensex remained volatile through the day.
Analysts agree China, Greece and US Fed developments need careful monitoring but India should gain, over time, from relative rise of the dollar and fall in commodity prices.
With a rise of around 30 per cent in the benchmark index S&P BSE Sensex, 2014 has been the best year for Indian equity markets since 2009, when the benchmark index surged 81 per cent.
Reliance Industries was the top Sensex gainer up 5.6% after the company reported better-than-expected net profit growth at 12% in the second-quarter aided hby higher gross refining margins.
All sectoral indices, led by realty, PSU, oil & gas and banking, were in positive zone with gains of up to 1.25 per cent.
Experts suggest domestic factors rather than the Greece crisis would determine the course of the Indian equities.
Indian markets rose 19 per cent in the first half of this financial year, the best performance by any market during this period, globally.
The broader markets are trading inline with the larger peers with BSE Midcap and Smallcap indices up 1.5% each.
The road ahead for the markets in the short term will depend on external factors rather than domestic developments.
AAP has promised lower electricity bills, free basic water supply.
Analysts expect global markets to remain in consolidation mode with a negative bias over the next six months.
Stressed asset funds could offer higher returns than traditional fixed-income funds, but holding period will be longer due to the risky underlying assets
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