Sensex, Nifty down amid of a global rate raise fears

Indian Market lost away for the second straight period on Monday, uneasy that global growth would slow sharply in the middle of continued tightening by central banks. The Street also expects more raises in local interest rates with inflation remaining uneasily high.

The benchmark indices Nifty 50 and BSE Sensex lost over 1%, dragged lower by metals and banks, as a weak global signal considered from the point of view. The NSE Nifty 50 index closed down 688 points or 1.51% to closed at 17,490, while the S&P BSE Sensex gave up 1.46% or 872 points to end the period at 58,773. Apart from ITC and Nestle India, all Sensex stocks posted losses. 

The two straight days of losses carry off investors’ wealth worth over `6.57 trillion. Strategists at HSBC wrote late last week that the Indian equity market has seen a turnaround, relieving inflationary pressure and a lower risk of steeper U.S. rate raises. “We see many factors coming together, creating a Goldilocks-like scenario for the continued support of the bull run in India. We prefer to position for a continued risk-on rally through a mix of domestic cyclical and growth stocks,” they said.

However, the weakness in the Chinese economy, driven by the troubles in its real estate market, appears to have led to apprehensions that the slowdown could spill over to other economies as well. Also, the recent rally has meant the markets are now a shade more expensive with the Nifty trading at over 21 times the estimated one-year forward earnings. As such there were bouts of profit-taking following the rally earlier in August, analysts pointed out.

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