Markets extended their southward journey this week owing to the hawkish comments from the RBI’s MPC minutes, which suggested that a premature pause in rate tightening would be a costly policy error at this juncture. Selling was further extended after health minister Mansukh Mandaviya said that COVID is not over yet. These signals led the BSE Sensex to tumble by 1493 points, or 2.4 per cent, to settle at 59,845.29. While The Nifty 50 index lost 462 points or 2.5 per cent to settle at 17807 during the week ended on Friday, December 23, 2022.
Market watcher Shibani Sircar Kurian, Senior EVP & Head- Equity Research, Kotak Mahindra Asset Management Company, said: “The Indian equity markets witnessed volatility in the week ended Dec 23, 2022. This was on the back of concerns emanating from the increase in Covid cases in China as the country abandoned its Zero Covid Policy. Strong US GDP data added to the belief of ‘higher for longer’ interest rates in the US.”
“The Bank of Japan ‘BoJ’ too, decided that it will expand the target range of 10-year Japanese government bond ‘JGB’ yield fluctuations from +/-0.25% previously to +/-0.5%. On the domestic front, November CPI inflation declined MoM and stood at 5.88% (October: 6.77%). The fall in inflation was led by a steep sequential fall in food prices. Given the trajectory of inflation in India, we expect that the February MPC decision will be a close call between a pause and 25 bps of the repo rate hike, with a bias towards the hike.” Kurian added.
Nifty 50 index this week
Only 7 stocks in the Nifty 50 index delivered a positive return to investors in the week ending December 16, 2022. With a gain of (5.2 per cent), Divi’s Laboratories emerged as the top gainer in the index. It was followed by Apollo Hospitals Enterprise (up 2.9 per cent), Cipla (up 2.7 per cent), Nestle India (up 2 per cent) and Sun Pharmaceutical Industries (up 1 per cent). On the other hand, Tata Motors, Tata Steel, UPL and Adani Ports and Special Economic Zone declined 10.2 per cent, 7.9 per cent, 7.7 per cent and 7.6 per cent, respectively.
Market veteran Vinod Nair, Head of Research at Geojit Financial services, said: “Globally markets were losing their grip post the Fed announcement which hinted on a further rate hike in the upcoming meeting. Robust US economic data points such as better-than-expected Q3 GDP, higher consumer confidence along with healthier jobless claims fueled the worries flaming the volatility. Additionally, the spike in COVID cases across China dampened the appetite for risk as it instilled fears of another global COVID outbreak.”
Sector-wise, the BSE Healthcare index gained 0.8 per cent during the week gone by. While the BSE Power index declined the most, 8 per cent it is followed by the BSE Realty index which is down 6.7 per cent during the week. BSE Metal, BSE Capital Goods, and BSE Oil & Gas indices also slipped more than 5 per cent.
S Ranganathan, Head of Research at LKP Securities, said “A sea of red engulfed markets today with multiple headwinds deterring investors and such was the damage across sectoral indices that they literally waited for markets to shut for the day. The sheer speed with which the Sensex came back below 60K today clearly reflected the mood to be in cash with several participants facing margin calls due to marked-to-market losses”.
Also Read: D-St selloff in numbers: Rs 8.5L cr investor wealth wiped out; 7 of 8 stocks in red
