Indian equity markets snapped their four week winning streak to end with losses on account of weak global cues. Both, Nifty and Sensex retraced from their all-time high weekly closing to end 116 and 130 points lower respectively (-0.7%/-0.2% WoW) at 15683 and 52,344 respectively.
The broader market fell more sharply with both Nifty Midcap100 and Nifty small cap100 down 3.0% and 1.8% respectively.
Except FMCG that grew 1.8% and IT that grew 0.8%, all the other sectors ended in red with metals being the biggest loser – down 6.6%.
PSU Banks, Auto, Pharma, Energy and Realty ended 3-4% lower while Private Banks, Financials, Media and Infra ended with 1-2% losses. FIIs remained net buyers for the fourth week in a row, having bought equities to the tune of Rs 1,000 crore while DII were sellers to the tune of Rs 500 crore.
Global cues were weak post US Fed’s hawkish policy statement wherein it indicated two potential rate hikes in 2023 and that it might ease off economic stimulus earlier than previously expected.
As per Reuters, the Federal Reserve moved first projected rate increases from 2024 to 2023 and opened talks about when to pull back on the $120 billion in the monthly bond purchase.
Domestically, Nifty witnessed huge volatility during the week on the back of weak global cues and China’s efforts to curb commodity prices. Metal stocks tumbled the most after China announced plans to release its state reserves of copper, aluminum and zinc to ensure stable prices of commodities.
Fertilizer stocks gained during the week after the news that the Cabinet has approved Nutrient based subsidy rates for FY22 and increased subsidy rate for DAP fertilizer.
Domestic Market may consolidate for some-time before resuming its rally. Technically too, the trend remains intact for an up move towards 16,000 mark.
Globally, investors would cautiously track what action other central banks takes following Fed hawkish announcement.
Domestically, Covid-19 cases continue to subside while Covid-led restrictions in many parts of the country are getting eased gradually, thus lifting hopes of faster economic recovery.
Going ahead, RBI’s step forward along with monsoon and the pace of vaccination would decide the further direction of the market.
Traders should be cautious in the current scenario and adopt stock specific approach as markets get volatile. On the other hand, long term investors can take advantage of this volatility and adopt buy on dips strategy.
(The writer is Head – Retail Research, MOFSL)