The Indian equity markets cracked on the bourses on Monday, bleeding under global pressure. Meanwhile, bond yields rose and emerging markets’ currencies hit fresh lows against the US dollar. Against this backdrop, the S&P BSE Sensex plunged 1,776 points intra-day before closing at 52,847, down 1,457 points or 2.68 per cent. The Nifty50, on the other hand, fell 427 points, or 2.64 per cent, to settle at 15,774. The index touched a low of 15,684 in intra-day trade.
Inflation Fears Wreck Havok
The havoc comes after May’s US inflation print, at a 40-year high of 8.6 per cent, reignited fears that central banks will be forced into aggressive monetary policy tightening. The US Fed, Bank of England, and Bank of Japan are slated to announce their respective interest rate decisions this week.
Top Losers and Gainers
Nestle India was the only Nifty50 company that ended 0.5 per cent higher. The top laggards were Bajaj Finserv, IndusInd Bank, Bajaj Finance, Hindalco, Tech M, Tata Motors, ICICI Bank, Adani Ports, NTPC, and TCS. All these stocks fell between 4 and 6.7 per cent.
In the broader markets, the Nifty MidCap 100 and SmallCap 100 declined 2.9 per cent and 3.8 per cent, respectively. Sectorally, all the indices sunk on the NSE with the Nifty IT and Media indices sliding 4 per cent each, and the Nifty Bank tanking over 3 per cent
Domestic Inflation Numbers Awaited
India’s inflation report is expected today, and investors are worried about the Reserve Bank of India’s next move.
Mohit Nigam, head — PMS, Hem Securities, said: “If retail inflation in India continues to grow and crosses the 8 per cent milestone, the market will become more volatile. Investors may wait until the market trend becomes clearer, but long-term investors should stay invested if they have a long-term investment plan, since a large correction will provide an opportunity for investors to purchase high-quality equities at appealing prices.”
Volatility To Stay
India VIX has surged about 13 per cent while all the sectors are in deep red.
Pankaj Pandey, head – Research, ICICIdirect, said: “On the equity market outlook, while we believe volatility may remain in the near term, the recent trough gives an opportunity to the long-term investors to load up on quality companies with sustainable growth visibility. On the medium term, we continue to remain constructive on domestic consumption, capital goods and allied space and domestic manufacturing plays.”
What Should Investors Do?
Manoj Dalmia, founder and director, Proficient equities Private limited, said: “Investors should book small profits in their recent investments if made on a swing basis and avoid heavy buying instead some small quantity can be bought on every dip in case of value stocks and keeping a cash reserve is good during this time as every dip can be seen as an investment opportunity.”
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