- Auto and banking stocks led the bandwagon of bears. Following the broad-based selloff, investors lost over ₹6.53 lakh crore of wealth in a single day. The rupee touched a fresh all-time low, while foreign funds continue to pull out money from equities.
Indian markets kicked started this week’s trading session with a bloodbath. On Monday, Sensex nosedived by more than 1,060 points and Nifty 50 plunged 349 points respectively. Auto and banking stocks led the bandwagon of bears. Following the broad-based selloff, investors lost over ₹6.53 lakh crore of wealth in a single day. The rupee touched a fresh all-time low, while foreign funds continue to pull out money from equities. Indian equities bled tracking feeble global cues as signals of further aggressive rate hikes by the US Fed dampened the mood. The turbulence in the market is expected to stay with a focus now shifted to RBI’s monetary policy.
Sensex shed 953.70 points or 1.64% to end at 57,145.22. The benchmark slipped by at least 1,060.68 points during the day by clocking an intraday low of 57,038.24. Asian Paints, HCL Tech, and Infosys stocks were top gainers. While heavyweights Reliance Industries, Maruti Suzuki, ITC, ICICI Bank, HDFC Bank, Bajaj twins, Tata Steel, Axis Bank, and NTPC were among the major draggers.
In terms of sectoral indices, BSE Bankex dropped by over 1,037 points, while the Auto index tumbled nearly 1,158 points. The metal index plummeted by over 841 points. Except for the IT index, all other sectors were in the red. IT stocks narrowly dodged bears on the back of a weak rupee.
In the broader market, the BSE Midcap and Small-Cap shed over 2.8% and 3.3% respectively. Large caps too were toppled.
The market cap of BSE-listed firms stood at ₹2,70,11,460.11 crore by end of September 26 — lower by ₹6,53,106.68 crore from last week Friday’s print of ₹2,76,64,566.79 crore. That said, investors lost over ₹6.53 lakh crore in wealth on BSE.
Vinod Nair, Head of Research at Geojit Financial Services said, “The soaring dollar as a result of aggressive monetary tightening, slowing economic growth, and rising demand from cautious investors are causing turbulence in the global equity market. This is creating mayhem in the domestic market led by weakening INR, elevated bond yields, and pessimistic trends of Asian peers. Only the IT sector, which exhibited the weakest performance in the last 1yr, defied the trend in anticipation that the global recession is mostly factored in the price and are trading at reasonable valuations.”
Coming to Nifty 50, the benchmark closed at 17,016.30 lower by 311.05 points or 1.8%. The benchmark slumped by at least 349.05 points in the day with an intraday low of 16,978.30.
Bank Nifty declined by 930 points to 38,616.25.
Ajit Mishra, VP – Research, Religare Broking said, “Markets slumped sharply lower and lost nearly 2%, in continuation of Friday’s decline. Weak global cues weighed the sentiment in the early trades, leading to a gap-down start, followed by volatile swings till the end. Finally, the Nifty index settled closer to the day’s low to close at 17,016 levels. The selling pressure was widespread and all the sectoral indices, barring IT, ended deep in the red. The broader indices also traded in tandem with the trend and lost over 3% each.”
At the interbank forex market, the Indian rupee fell by 0.78% to end at 81.6225 against the dollar. During the day, the rupee clocked an all-time low of 81.6526 against the greenback. Meanwhile, the US currency touched a 22-year high.
Meanwhile, foreign investors (FIIs) made a net purchase of ₹6,232.04 crore in equities, while they sold ₹11,333.34 crore. Thereby, FIIs outflow stood at ₹5,101.3 crore on September 26. This is the highest selling by FIIs in the current month.
What should investors do as market crashes?
Vineet Bagri, Managing Partner- TrustPlutus Wealth explained that investors are cautious about the outlook for equity markets globally due to the increasing assertiveness of global central banks on implementing interest rate hikes to tame rising prices. Thus central banks are likely to prioritise inflation control vis a vis economic growth thus raising the risks of a global recession.
On the positive side, Bagri said, “we have crude below ~$85/bl, but the benefit of the same gets negated partly due to the strengthening dollar. India is currently in a better position with a pickup in credit growth to ~15% and an uptick in tax collection.”
“India’s economy is in far better shape than others as regards growth prospects over the next 12 months. High frequency indicators too are stable. Nonetheless we could see further cuts in the Indian market over the next few days considering the hawkishness being displayed by global central banks and a weakening currency,” Bagri added.
In his concluding remarks, Bagri said, “The selloff in the pound, unrelenting rise in the dollar index, weakening rupee and the impending RBI meet in the latter part of this week should keep markets on the tenterhooks. Nonetheless, we continue to believe in the relative outperformance/strength of Indian markets vs emerging/developed economies. We believe one needs to look beyond these current worries and use the bouts of volatility to invest in steady compounding stocks which are in secular businesses.”
Shrikant Chouhan, Head of Equity Research (Retail), Kotak Securities said, “The speed with which central banks across the globe are hiking interest rates, investors are worried that slackening growth would push key economies into recession. With the monetary policy decisions on the anvil, rate-sensitive stocks like banking, realty & auto crumbled badly as rate hikes could dent demand going ahead. However, due to markets being in oversold territory, we could witness a quick pullback rally. For traders, the 200-day SMA and 16850 would act as a key support level. On the flip side 17150 and 17200 could be the immediate hurdle for the bulls.”
Religare Broking’s VP said, “With no respite on the global front and a resumption of selling from foreign investors, we expect markets to remain under pressure and test the 16,800-16,900 zone in Nifty. Select pockets from FMCG, pharma and IT are showing resilience while the majority are reeling under pressure. Participants should align their positions accordingly.”
The six-member MPC is scheduled to begin its 3-day monetary policy meeting from September 28, while the outcome will be announced on September 30.
Currently, RBI’s policy repo rate stands at 5.4%. The central bank has hiked the repo rate by 140 basis points or 1.4% in the last three policies to tame inflation. In the September policy, expectations of a fourth hike in the range of 35-50 basis points are on cards. CPI inflation is above RBI’s upper tolerance limit for the eighth consecutive month to 7% in August.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint.
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