Weekly Market Wrap: Bears in full control as selloff continued for second straight week on Dalal Street

Following US Federal Reserve’s statement that it expects to continue raising the interest rates in 2023 for a longer period, sentiments across markets remained low as there are expectations that the central bank could take a dovish turn next year. 
Sentiments remained low in Indian markets as the government data showed that the trade deficit between India and China touched $51.5 billion during April-October this fiscal. India’s industrial output, as per the Index of Industrial Production (IIP), contracted by 4 per cent in October 2022. These signals led the BSE Sensex to tumble by 844 points, or 1.36 per cent, to settle at 61,338 on Friday. The Nifty 50 index lost 228 points or 1.23 per cent to settle at 18,269.
 
Market veteran Deepak Jasani, Head of Retail Research at HDFC Securities, said: “Key Indian benchmark indices ended in the red for the second week as recession fears in the US and Euro region, coupled with growth slowdown concerns back home, weighed on the sentiment. Reports of fresh Russian onslaught on Ukrainian soil added to the turmoil.  Average cash turnover on NSE was up by ~5 per cent as compared to the previous week. As per provisional figures, FIIs were net sellers of Rs 1833 crore in the equity markets and DIIs were net buyers of Rs 3462 crore. The Indian 10yr G-Sec yield decreased by 2 bps to 7.28 per cent.”
 
“The Indian rupee depreciated by 61 paise to Rs 82.82 per USD. US equities declined, posting a second-straight weekly loss, as recession worries have ratcheted higher in the wake of a host of global central bank actions this week. The Fed’s mid-week 50 basis point rate increase was followed by similar actions from the European Central Bank, the Bank of England, and Swiss National Bank. Intensified fears over rising interest rates dampened sentiments as the official Fed statement reiterated that ongoing rate increases are likely to continue.”

“US markets ended lower for the week, as the DJIA declined 1.7 per cent, the S&P 500 fell 2.1 per cent, and the Nasdaq Composite dropped 2.7 per cent. Recessionary fears have resulted in markets eroding across the globe. Nifty lost 1.23 per cent over the week and looks set to continue its down move. 18088-18133 band is the next support while 18442 could be tough to breach in the near term.” Jasani added.

Nifty 50 index this week

As many as 16 stocks in the Nifty 50 index delivered a positive return to investors in the week ending December 16, 2022. With a gain of (4.6 per cent), Oil & Natural Gas Corporation emerged as the top gainer in the index. It was followed by IndusInd Bank (up 2.2 per cent), Tata Motors (up 1.9 per cent), Divi’s Laboratories (up 1.4 per cent) and Bajaj Finance (up 1.2 per cent). On the other hand, Asian Paints, Titan Company and Adani Ports and Special Economic Zone declined 5.3 per cent, 5.1 per cent and 3.4 per cent, respectively.
Sector-wise, the BSE Oil & Gas index gained 0.6 per cent during the week gone by. While BSE Information Technology and BSE Teck indices declined the most, 1.9 per cent and BSE Realty indices declined 1.7 per cent during the week. BSE Fast Moving Consumer Goods, BSE Healthcare, BSE Auto and BSE Bankex indices also slipped more than 1 per cent.
 
Vinod Nair, Head of Research at Geojit Financial services, said: “Volatility in the market this week was dictated by the release of favorable inflation numbers, which were offset by major global central bank’s aggressive decisions. US CPI inflation eased to 7.1 per cent in November, while India’s retail inflation eased sharply to 5.88 per cent, which was within the RBI’s tolerance band.”
“However, the Fed startled the market by maintaining its hawkish tone, as investors were expecting a softer approach after the release of better-than-expected inflation numbers. Following the Fed, BOE and ECB raised their interest rate by 50 bps while maintaining their hawkish stance in combating inflation.  While the selloffs were broad-based, IT stocks dragged in the domestic market as recession fears boomed in the global economies. Lack of major triggers will push the domestic market to follow its global peers, in the coming week.” he added.