The S&P BSE Sensex slipped 305 points to end at 25,400 and the Nifty50 dropped 87 points at 7,783.
In twin blows to Indian economic revival, higher food prices drove retail inflation to a five-month high of 7.4 per cent while factory output fell for the first time in 18 months. The second consecutive month of rise in consumer price index (CPI)-based inflation will add to the pressure on the Reserve Bank of India (RBI) to again raise interest rates to tame high prices. Inflation has been above the targeted zone for the ninth month in a row and as per statute, the RBI will now have to explain to the government in writing why it failed to keep prices below 6 per cent.
Indian rupee is likely to test 76-76.50 levels as a relatively strong greenback, boiling crude prices and COVID headwinds deepen the depreciation bias for the domestic currency, according to experts. One of the significantly-hit Asian currency in recent months amid uncertain economic times, rupee is expected to see a consolidation in the vicinity of the current level before being pulled towards the depreciation bias. While the equity market has been surging with occasional blips, the rupee has mostly been weak against the US dollar in recent months.
'A strong foreign exchange reserve is the best safety net against global spillovers.'
Finance Minister Nirmala Sitharaman has said the recent interest rate hike by the Reserve Bank was not surprising for her but the timing was, asserting that the rising cost of funds will not impact the government's planned infrastructure investments. For the first time since August 2018, RBI had on May 4 delivered a blunt 40 basis points increase in key repo rate to 4.40 per cent, and also hiked the cash reserve ratio by 50 basis points to 4.5 per cent after an unscheduled meeting of the rate setting panel, citing increased inflation pressures following the Ukraine war and the resultant spike in crude oil prices. Retail inflation printed at 6.9 per cent in March and the April reading is forecast to top 7.7 per cent.
Bajaj Finserv was the top gainer in the Sensex pack, rising over 4 per cent, followed by L&T, HDFC, Axis Bank, SBI, Reliance Industries and IndusInd Bank. NSE Nifty soared 276.30 points to its new closing peak of 17,823.
There are overvaluation and excesses in many pockets of the market. This is most obvious in the IPO market, where loss-making companies have inflicted large losses on investors, observes Debashis Basu.
The US Federal Reserve on Tuesday cut interests rates by 0.75 points from 3 per cent to 2.25 per cent. The cut initially disappointed markets which had risen sharply on hopes of a 1 percentage point cut. The decision was taken by eight votes to two. First quarter earnings at the two Wall Street firms fell less than analysts had expected, easing concerns about the state of the investment banking sector.
Reflecting nervousness over the prospect of the Federal Reserve tightening policy and event risk, traders stayed on the sidelines
Macro-economic data from China and minutes of the US Federal Reserve's last meeting caused the turmoil as stocks tumbled around the globe.
All evidence suggests that the US Federal Reserve will raise interest rates soon.
It has been a slow 2022 thus far for the primary markets. In the last 8 months, only 16 companies have raised Rs 40,311 crore via the initial public offer (IPO) route, data from PRIME Database suggests. In comparison, 63 companies had raised a cumulative Rs 1.18 trillion via the IPO route in 2021. A large part of the funds raised in 2022 were on account of the two IPOs - Life Insurance Corporation of India (LIC) and logistics firm Delhivery - that raised a total of over Rs 26,000 crore between themselves.
Some profit taking towards the end saw the Sensex pare gains and finally settle at 17,594 - up 5.2% (864 points) - third best single-day gain ever. Thus, the index today broke its seven-day losing streak wherein the index had shed 19% (4,097 points). The NSE Nifty gained 304 points to close at 5,203.
Equity benchmarks Sensex and Nifty halted their five-day rally on Tuesday and settled deep in the red, mirroring weak global markets, with decline in index heavyweights Reliance Industries, Infosys and HDFC Bank. Despite opening with gains of over 200 points, the 30-share Sensex turned highly volatile and tumbled 709.17 points or 1.26 per cent to close at 55,776.85. During the day, the benchmark index plunged 1,067.07 points or 1.88 per cent to 55,418.95. The broader NSE Nifty also declined 208.30 points or 1.23 per cent to close at 16,663.
In August, domestic equity markets garnered one of the highest foreign portfolio investor (FPI) flows since the outbreak of the pandemic in 2020, despite the US Federal Reserve standing firm on unwinding its stimulus measures to control inflation. FPIs pumped in over Rs 51,000 crore ($6.4 billion) in August, the most since December 2020 and the third-highest tally since March 2020-the month the Covid-19 pandemic roiled global markets. This was the second consecutive month of positive foreign flows. In the preceding nine months, FPIs had yanked out over $32 billion or Rs 2.2 trillion.
Rising for the fourth straight day, benchmark indices Sensex and Nifty settled marginally higher after a choppy session on Friday, tracking mixed global trends amid uncertainties on the geopolitical front. The BSE Sensex opened weak and declined 414.44 points to 55,049.95 in opening deals. But within minutes, it pared all its losses and jumped 369.56 points to 55,833.95. Facing volatility, the index finally settled at 55,550.30, higher by 85.91 points or 0.15 per cent.
Premium valuations era started in 2006 and went hand in hand with decline in the US interest rates
The US FOMC concludes its two-day meeting today while the Bank of Japan will start its two-day meeting today.
'It is less dependent on imported capital.'
After three consecutive years of infusing huge funds, foreign portfolio investors retreated from the Indian equity markets in a big way in 2022 with the highest-ever yearly net outflow of nearly Rs 1.21 lakh crore. The huge outflow, which surpasses by a big margin the previous record of Rs 53,000 crore net withdrawal in 2008, came amid aggressive rate hikes by central banks globally but 2023 is expected to be better on positivity about overall macroeconomic trends in India, experts said. Apart from global monetary tightening, volatile crude, rising commodity prices along with Russia and Ukraine conflict led to an exodus of foreign money in 2022.
India must take urgent measures like issuing sovereign guaranteed bonds and exempting FIIs from short term capital gains tax to stem the rupee's slide, India Inc said.
Heavy unwinding by foreign portfolio investors and lacklustre equities dampened the sentiment
The Reserve Bank of India (RBI) will stay away from changing key rates - including the reverse repo rate - this fiscal in the backdrop of Omicron. However, it will continue to shape the rate movements through liquidity market operations. Soumya Kanti Ghosh, group chief economic advisor, State Bank of India, said whether Omicron surge or not, there is not going to be any hike this year. However, the central bank may continue to shape rates through market operations.
The US Federal Reserve has said economic activity is improving while deciding to continue with the near-zero interest rate regime to bolster the economy.
The present happenings in Manipur are the wages of continued neglect, and not so benign at that, of a vital region and its people. Had we lavished on the North East even a fraction of the care and resources we do on Kashmir, things would not have come to this pass, asserts Shreekant Sambrani.
The BJP leadership knows it can't boast of governance in the state as the Bommai government has little to show. So, the game plan is to project Modi, who will reiterate how important it is for a state to have the same party ruling in power at the Centre, observes Ramesh Menon.
Olympic bronze medallist India eked out a hardfought 3-2 win over South Africa to advance to the men's hockey final of the Commonwealth Games in Birmingham on Saturday.
HDFC was the top loser in the Sensex pack, shedding over 2 per cent, followed by Axis Bank, Bharti Airtel, M&M, Reliance Industries, ICICI Bank, IndusInd Bank and Titan.
The breadth, indicating strength of the market was strong
American President Barack Obama on Tuesday extended the tenure of US Federal Reserve Chairman Ben Bernanke by another term.
The Congress released a booklet 'Nau saal, Nau sawaal', asking nine questions from Modi. The BJP rejected the Congress' criticism as a 'bundle of lies and mountain of deception' and said the questions are born out of 'pathological hatred' of the PM.
IndusInd Bank was the top loser in the Sensex pack, shedding around 3 per cent, followed by Dr Reddy's, NTPC, Maruti, Axis Bank, Bajaj Auto, Bharti Airtel and HDFC. NSE Nifty declined 76.15 points to 15,691.40.
Equity benchmarks mustered gains for the first time this week on Thursday as investors piled into the recently-battered metal, bank and IT stocks amid expiry of monthly derivative contracts. Snapping its three-session losing streak, the 30-share BSE Sensex rallied 503.27 points or 0.94 per cent to settle at 54,252.53. On similar lines, the broader NSE Nifty gained 144.35 points or 0.90 per cent to end at 16,170.15.
Overseas investors have pulled out a net Rs 1,14,855.97 crore from the Indian markets in the current year so far, amid heightened geopolitical tensions and inflation concerns. Foreign portfolio investors have sold domestic equities worth Rs 48,261.65 crore so far this month, taking the year-to-date tally this year to a massive Rs 114,855.97 crore, according to depositories data. The exodus of foreign investors was largely owing to inflationary pressures and deepening global macroeconomic conditions following the Russia-Ukraine war, experts said.
Noting that the United States economic recovery is still not strong enough, the Federal Reserve has said it would pursue with the proposed $600-billion government securities buyout plan.
A Bangladeshi man with alleged links to Al Qaeda was arrested in New York after an undercover operation by the Federal Bureau of Investigation foiled his plot to detonate a 1,000-pound bomb and blow up the city's Federal Reserve Building. Quazi Mohammad Rezwanul Ahsan Nafis, 21, faces charges of attempting to use a weapon of mass destruction and attempting to provide material support to Al Qaeda.
The speed at which he led the central bank in different areas -- ranging from internal reorganisation to inflation fighting, stabilising the currency, taking on rogue corporations, cleaning up bank balance sheets, and opening the sector -- makes one believe that Rajan knew he had only three years to do his job. A fascinating excerpt from Tamal Bandyopadhyay's MUST-READ Roller Coaster: An Affair with Banking.
Continuing their massive selling spree for the ninth consecutive month, foreign investors dumped Indian shares worth Rs 50,203 crore in June -- the highest net outflow in over two years -- amid aggressive rate hike by the US Federal Reserve, elevated inflation and relatively higher valuation of domestic equities. Foreign portfolio investors (FPIs) have now pulled out around Rs 2.2 lakh crore from domestic equities in the first six months of 2022 -- the highest-ever net withdrawal by them. Before that, FPIs withdrew Rs 52,987 crore in the entire 2008, data with depositories showed.
More interest rate cuts by the US Federal Reserve to protect its slowing economy are likely to strengthen gold prices further with the metal being a safe haven for investors having offered handsome returns in the last year-and-a-half.
The deluge of offerings in the primary market, a muted results season and increasing talks of a Fed taper may quicken the pace of overseas investors selling Indian equities in the near term. The next few weeks may see a dozen companies tap the market for initial public offerings and raise about Rs 30,000 crore. These include the likes of Zomato, Glenmark Life Sciences, Utkarsh Small Finance Bank and Seven Islands Shipping.
