India’s stock markets tumbled in trade, dragged by losses across sectors, led by banking and IT stocks. The decline comes amid a surge in inflation in the US to record levels, crude prices at elevated levels, and concerns over the global growth slowdown. The S&P BSE Sensex slumped over 1,700 points as it slipped below the 53,000 level and the Nifty50 shed 500 points to slide below 15,700.
The market cap of BSE-listed firms fell to Rs 246.14 lakh crore today against Rs 251.81 lakh crore market cap in the previous session, translating into a loss of Rs 5.67 lakh crore. Market breadth was negative with 651 shares trading higher against 2,623 stocks falling on BSE. Around 125 shares were unchanged. BSE mid-cap and small-cap indices fell 481 points and 590 points, respectively in trade today. Foreign institutional investors (FIIs) remained net sellers in the capital market, as they offloaded shares worth Rs 3,973.95 crore on Friday, as per exchange data.
Commenting on the market mayhem on D-street, VK Vijayakumar, chief investment strategist at Geojit Financial Services, said: “The near-term market trend is weak. The May US inflation print at 8.6 per cent against the market expectation of 8.3 per cent is likely to turn the Fed more hawkish with a series of 50 bp rate hikes taking the terminal rate by mid-2023 above 3.5 per cent. Such a scenario would be negative for risky assets like equity, particularly in the context of declining global growth. The Indian market will stabilise only when the US market stabilises.”
What Should Investors Do Now?
Don’t Panic Sell
Higher than expected hot inflation data in the US last week have made markets nervous about the upcoming US Fed policy meeting due the current week. After high inflation markets are fearing US Fed could take unexpected policy measures in order to control inflation and which may impact overall economic health.
Narendra Solanki, head- equity research (fundamental), Anand Rathi Shares & Stock Brokers, said: “Investors should hold on to their stocks which are performing and wait for further clarity on US Fed rate hike and its glide path for further action. Though valuations have come down still clarity on interest rate move is needed in the short term as these have potential to impact earnings growth.”
Opportunity to Buy Quality Names
Nifty down by 400 points and Bank Nifty down by 1150 points as weak global cues on the back of US inflation number above market expectations. Global markets are also down by 2-3 per cent.
Yash Gupta- equity research analyst, Angel One Ltd, said: “We expect the market to consolidate at these levels, long term investors can use this market dips to buy good quality stocks, short term investors need to be cautious as we expect volatility to continue in the market on the back of global as well as domestic news flows.”
Mirroring similar thoughts, Santosh Meena, head of research, Swastika Investmart, said: “the current uncertain times are best to lap up such quality stocks and investors can use the buy on dips strategy, however, in the near term, the markets are going to be volatile.”
Opportunity to Rejig Portfolio
A market correction can be utilized as a good opportunity for investors to rejig its portfolio. Asutosh Mishra, head of research, Institutional Equity, Ashika Group, said: “Many times, we miss to add some of the stock we like very much. In this correction, we get an opportunity to acquire these stocks at a much more reasonable valuation. Also, exit from the stock where you are not confident about future growth trajectory or there are concerns due to change in the macro-environment.”