Thursday turned terrible for equity investors as the benchmark equity indices BSE Sensex and NSE Nifty tanked 2 per cent amid the ongoing uncertainty over rising inflation and sustained outflow by foreign institutional investors. As a result, more than 250 stocks on the National Stock Exchange (NSE) scaled a fresh 52-week low on June 16. Some of the stocks on the list include Aarti Industries, Amara Raja Batteries, Amber Enterprises, Bajaj Finance and Dilip Buildcon.
Overall, the 30-share index Sensex tanked 1,045.60 points to 51,495.79 on Thursday. On the other hand, the 50-share NSE Nifty index settled 331.55 points down at 15,360.60. Meanwhile, Sensex scaled its fresh 52-week low of 51,425.48 and Nifty hit a new 52-week low of 15,335.10 during the day.
Hindustan Zinc, Hikal Ltd, Infosys, Ircon International, Just Dial, Kansai Nerolac, Snowman Logistics, SpiceJet, Tata Steel, Vaibhav Global, Yuken India and Zodiac Clothing stood among other firms which scaled new 52-week low in Thursday’s trade.
Prashanth Tapse, vice president (Research), Mehta Equities said, “After witnessing a temporary relief that saw markets rebound in the morning session, Nifty’s gains evaporated as the benchmark fell hard and, most importantly, ended at its lowest point of the day. The outlook for sizzling core inflation is still troubling the big Nifty bulls.”
“The fact that the Fed has stepped up to raise rates faster, the street suspects that the RBI may catch up with the hawkish Fed. After today’s sharp plunge, we suspect bulls will have to battle hard in the backdrop of a hawkish Fed and RBI, spiking oil prices, inflation concerns, growth fears and persistent FIIs selling. Technically speaking, the immediate support for Nifty is seen at 15,000 mark. Below 15,000, we expect the Nifty to quickly slip towards 14,251 mark,” Tapse added.
Meanwhile, the market capitalisation of BSE-listed firms tanked by Rs 5.55 lakh crore to Rs 239.20 lakh crore from Rs 244.75 lakh crore on Wednesday. Sectorwise, the BSE Metal index tanked the most 5.48 per cent. It was followed by Telecom (down 3.04 per cent), Realty (down 2.69 per cent) and TECk (down 2.51 per cent). IT, Auto, Bankex, Power and Consumer Durables indices also slipped over 2 per cent.
Vinod Nair, head of research, Geojit Financial Services said, “Market is catching up to the reality that tight monetary policy is the lone card on the table lingering on high inflation. As a result, the global economy is bound to slow down further impacting corporate earnings, as indicated by month-on-month fall in US retail sales. Valuations continue to trade on the marginally upper side of long-term averages and FIIs continue the selling mode. The stocks trading at high valuations and sectors like IT and metals are the most impacted firms.”
While sharing his advice to investors, Nair added that in equities, safe sectors will be those that are least impacted by inflation and aggressive policy like finance and services. Defensives like consumption, IT, Pharma and telecom can also be considered on a long-term basis.
Ajit Mishra, VP-research, Religare Broking said, “Markets are skeptical about how the global economies would attain growth amid the aggressive tightening. After the decisive breakdown below 15,650 in Nifty, the next major support zone exists around the 14,800-15,000 zone. We feel it’s prudent to stay light and align the positions accordingly until we see some decisive signal of reversal.”
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