Tracking sharp losses within the US markets in a single day and Asian shares this morning, Indian benchmark indices tanked 1.5% on Friday. The BSE Sensex fell over 1,000 factors to 54,668, whereas the NSE Nifty 50 shed 316 factors to 16,366. All frontline shares have been within the purple. In the broader markets, the BSE MidCap and SmallCap indices fell as much as 2.2%. Sectorally, Nifty client durables, realty, IT, auto, financials, and metals have been down 2-3%. Stock markets all through the globe have turn into extraordinarily fragile attributable to growing inflation, central financial institution fee hikes have spooked Indian buyers. Analysts count on downward motion to proceed in coming periods. Investors should stick with high quality shares with good development outlook, they mentioned.
What’s dragging markets right now?
V Ok Vijayakumar, Chief Investment Strategist at Geojit Financial Services mentioned, “The single important factor roiling global equity markets is the reemergence of inflation as a major threat and market’s scepticism over the central banks’ ability to contain inflation without triggering a sharp economic slowdown. Nasdaq is at one-year lows and S&P 500 appears to be moving in that direction. India cannot remain uncoupled from this trend particularly when FPIs are on a selling spree and has more firepower to remain bearish.”
Sunil Nyati, Managing Director, Swastika Investmart, mentioned “Stock markets throughout the globe have become extremely fragile due to the entrenched inflation and the possibility of harsh measures by the central banks to tame the same, further other factors like geopolitical tensions, stagflation risk, and global economic growth slowdown have spooked Indian Investors and this led to a sharp fall in Sensex and Nifty. The sudden Repo Rate and CRR hike by the RBI has perplexed investors.”
Rohit Gadia, CIO at CapitalBy way of Global Research mentioned, “We have seen the bloodbath in Indian equity indices after the Bank of England projected inflation over 10% in 2023 and also warned that the UK economy could shrink. Central banks globally have started hiking interest rates in response to high inflation and faltering GDP are the key factors which are dragging the market. A day before yesterday, the US Fed had increased the interest rate by 50 basis points which is the highest in the past 22 years and at least two more similar increases are expected. RBI has also increased the interest rate by 40 basis points.”
“Yesterday, NASDAQ almost fell 5% as the investors believe that the actions of Federal Reserve won’t be able to tame the inflation and expect extreme moves from the central bank, further other factors like geopolitical tensions, stagflation risk, and global economic growth slowdown have spooked Indian Investors and this led to a 1.5% fall in Sensex and Nifty. The RBI rate hike on Wednesday marks the beginning of the rate hike cycle and to be honest, days of easy money seems to be over, reality often hits hard and we believe that the indices are going to stay range bound in coming days and there might be possibility of further correction,” mentioned Parth Nyati, Founder, Tradingo.
What ought to buyers do?
Calibrated shopping for on declines in small portions
V Ok Vijayakumar, Chief Investment Strategist at Geojit Financial Services mentioned, “Investors should remain calm in these turbulent times without taking aggressive positions. Calibrated buying on declines in small quantities in high quality stocks with preference for value over growth would be a good investment strategy.”
Economy going through sectors good bets
“Rather than tracking indices, stock-specific approach is more appropriate and this correction provides a good opportunity to enter quality names. The Indian economy is in a better shape compared to other nations and is poised to outperform in terms of growth, thus we recommend economy facing sectors like banking, infrastructure, capital goods and housing,” mentioned Parth Nyati, Founder, Tradingo.
Wait and assess scenario for upcoming periods
Rohit Gadia, CIO at CapitalBy way of Global Research mentioned, “We may see further downward movement in the equity market and Nifty may test the support level 15700. In this current situation, one needs to be careful and should wait and assess the situation for a few upcoming sessions.”
Stay with high quality shares with good development outlook
“The sudden Repo Rate and CRR hike by the RBI has perplexed investors and this marks the end of pandemic led stimulus, we believe that investors would have to work very hard to earn good returns as the days of easy money are ending. We suggest investors stay with quality names and invest in stocks that have a good growth outlook and are valued reasonably and take advantage of the current correction. Technically, 16000-15500 is an important demand zone where we can expect some buying interest. However, bulls will need to do the heavy lifting to cross the 17000-17250 supply zone,” mentioned Sunil Nyati, Managing Director, Swastika Investmart.
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Source: www.financialexpress.com”