Analysts say the market is now in a see-sawing phase, swinging up and down in response to positive and negative news. But the long-term texture of the market has been ‘ buy on dips’, a strategy that has been rewarding in this bull run, they add.
“The selloff in the US market yesterday was the market’s response to the 10-year yield touching 1.6 per cent. The Fed’s interpretation of the rising yield is that it is discounting better growth prospects while the market typically discounts stock prices at a lower PE when interest rates rise,” said VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services.
“Fed’s declared commitment to inject liquidity and keep rates low through 2023 can ensure a buoyant market this year. So investors can utilize opportunities thrown up by corrections to buy quality stocks in performing sectors.”
Equity investors lost Rs 1.38 lakh crore in just half an hour of trading as market cap of BSE listed companies slipped to Rs 204.8 lakh crore.
Factors driving markets
- Covid cases rise: Some of the states in India have seen a resurgence of Covid and the virus has started spreading again in certain clustres. This sudden spike has put traders on high alert as any more lockdown will be detrimental to economic recovery.
- US bond yields spike: Yields on the 10-year Treasury note eased back to 1.494 per cent from a one-year high of 1.614 per cent, but were still up a startling 40 basis points for the month in the biggest move since 2016.
How are the blue chips doing?
After opening in the red, benchmark indices continued to trade lower. At 9:45 am, BSE flagship Sensex was down 823 points or 1.61 per cent at 50,217. NSE benchmark Nifty followed, dropping 225 points or 1.49 per cent to 14,872.
In the 50-share pack Nifty, Maruti Suzuki was the biggest gainer, up 1.66 per cent. Coal India, Bharti Airtel, Nestle India, Dr Reddy’s Labs, HUL, Sun Pharma, Shree Cement and IndianOil were among other gainers.
IndusInd Bank was the top loser in the pack, down 4.08 per cent. ICICI Bank, Axis Bank, HDFC, HDFC Bank, GAIL, Kotak Mahindra Bank, SBI, M&M and Bajaj Finserv were other losers in the pack.
Broader markets
Broader market indices traded with cuts but performed better than their headline peers in morning trade. Nifty Smallcap was down 0.29 per cent while Nifty Midcap slipped 0.76 per cent. The broadest index on NSE — the Nifty 500 — was down 1.06 per cent.
SAIL, National Aluminium, Tata Chemicals, Just Dial, IDBI and NBCC were among major gainers from the space, while RVNL, IDFC, Cyient, RBL Bank, Shriram Transport Finance and M&M Financial Services were under selling pressure.
Global markets
Even the thought of an eventual end to super-cheap money sent shivers through global stock markets which have been regularly hitting record highs and stretching valuations.
MSCI’s broadest index of Asia-Pacific shares outside Japan slid 2.4 per cent to a one-month low, while Japan’s Nikkei shed 2.5 per cent. Chinese blue chips joined the retreat with a drop of 2.5 per cent.
NASDAQ futures fell 0.5 per cent after a sharp drop overnight, while S&P 500 futures eased 0.1 per cent. EUROSTOXX 50 futures lost 1.2 per cent and FTSE futures 1.1 per cent.
