On January 24, i.e. today’s business, for the 5th consecutive day, there was a decline in the market. By afternoon, the market was trading with a fall of about two per cent. Investors have lost about Rs 17.54 crore in these 5 days of heavy selling. Since January 17, the Nifty has lost 1,100 points or 5.4 per cent. At the same time, the Sensex has broken more than 3,300 points.
Let us take a look at the factors that are behind the sell-off in the market.
1-selling in global markets
The prospect of a hike in interest rates from the US Federal Reserve has added to the selling pressure across the world. The next policy meet of the US Fed will be on January 25-26. Analysts expect the Fed’s policy to tighten due to the rise in inflation in 2022. The Fed will take four rate hikes this year. The week ended January 21 has been the worst week ever for US stock indices. The ghost of hike in interest rates appeared to dominate the market.
2-Drop Tech Stocks
During the last few months, there has been a strong decline in the new age technology stocks listed in the stock market at heavy valuations. Due to which the sentiments of the investors have been hit hard. Retail and high net worth investors had bet heavily on these stocks and now they have suffered a huge setback from them. These stocks have been hit the hardest by the prospect of the US Fed raising interest rates several times this year. The tech sector is under tremendous pressure all over the world, and especially in the US.
If we look at the Indian market, Paytm’s parent company One97 Communications, CarTrade, PB Fintech, and Fino Payments Bank have slipped 10-50 percent from their listing price. Similarly, Zomato and Nykaa’s parent company FSN have lost 21 per cent from their post-e-commerce listing highs.
rising cases of covid
There is a steady increase in COVID cases in India. For the last few days, more than 3 lakh cases have remained. Due to this, there is also concern in the market. All the states have either increased the restrictions or announced the ban. Analysts believe that this may impact the economy activities in the near term.
Company’s earnings were affected by rising costs
It is clear from the initial trend of third quarter results that rising production cost is proving to be a game spoiler. Due to this, the profit margin of the company has been seen to be hit in another quarter. However, the earnings of the companies have been around the expectation. Analysts believe that the rise in cases of COVID-19 and rise in crude oil prices will also see pressure on the margins of companies in the current quarter.
weakness in demand
There was no increase in market demand even in the festive season. Rising inflation, late harvesting of kharif season on account of unseasonal rains and the impact of the second wave of COVID resulted in negative impact on demand during the third quarter.
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