Before CPI Inflation Data, the Sensex plunges 1,158 points, the Nifty drops below 15,850 points, and
On Thursday, the benchmark indices saw their fifth straight session of declines. At the closing, the Nifty was at 15, 808, down 359.10 points, or 2.22 percent, and the Sensex was down 1,158.08 points, or 2.14 percent, at 52,930.31. A total of 84 shares are stable, while 747 shares have increased and 2542 shares have decreased. Headwinds from inflation and interest rate increases brought on by the conflict between Ukraine and Russia and easy monetary policy, taking a bite out of equity returns. As a result, on the weekly F&O expiry day, the bear-run on the stock markets began its fifth consecutive day, with the main indices falling more than 2% apiece. Additionally, they both finished at their respective 9-week lows.
All Sectors in Deep Red
On frontline indices, Wipro and HCL Tech were the only gainers (up 0.7% and 0.1%, respectively), while losses were led by IndusInd Bank, Adani Ports, Tata Steel, Tata Motors, the Bajaj twins, Hindalco, Axis Bank, the HDFC duo, Titan, L&T, JSW Steel, and SBI (down 6% apiece).
The BSE MidCap index and BSE SmallCap index also had declines in the broader markets of 2.2% and 1.9%, respectively.
Sectorally, all of the important indices ended in the red, with the Nifty PSU Bank index taking the most hit, falling more than 5%.
Why is the Stock Market Falling Today?
Markets continue to be significantly hampered by inflation. Consumer inflation in the US was 8.3% in April, which confirms market worries about the Fed's fast rate hikes and the potential for a US recession in 2023. Since the dollar index is currently at 104 and is predicted to gain more strength, FIIs are likely to keep selling till the Indian valuation becomes appealing. Even if FII selling is currently outpacing DII buying, the market's attitude cannot be improved because of the strong macro headwinds. According to Dr. V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services, the market's preference for value over growth is evident in the strength of high-quality banking stocks, which are even today trading at buyable prices.
Policy Tightening By Central Banks
The Federal Reserve's policy change is the main justification offered by investors and professionals for the market's deterioration. Early in 2022, the Fed issued a warning that it was tightening monetary policy to rein in skyrocketing inflation, indicating a significant change in the investing environment.
The Indian market will open lower, according to the SGX Nifty and Global Trend, according to Mohit Nigam, Head - PMS, Hem Securities. The price of stocks on the US market fell. As investors continue to be concerned about rising interest rates, concerns over slowing economic growth, and new tightening measures in China, Indian markets are seeing choppy swings.
Weak Global Cues
After inflation data failed to allay investor concerns about the prospects for interest rates and the economy, US stocks ended substantially lower on Wednesday, with the Nasdaq plunging more than 3% and the Dow plummeting for a fifth straight day. The Nasdaq Composite plummeted 373.44 points, or 3.18 percent, to 11,364.24 while the Dow Jones Industrial Average sank 326.63 points, or 1.02 percent, to 31,834.11 and the S&P 500 dropped 65.87 points, or 1.65 percent, to 3,935.18.
As investors worry about inflation, Tokyo equities declined in early trade on Thursday following overnight declines on Wall Street. Early trading saw a 1.34 percent, or 350.51 points, drop in the benchmark Nikkei 225 index to 25,863.13, while the larger Topix index dropped by 0.79 percent, or 14.59 points, to 1,836.56. The dollar was trading at 129.58 yen, down from Wednesday's high of 130.00 yen in New York.
After falling on Wall Street, Hong Kong stocks began lower on Thursday as inflation fears resurfaced. To reach 19,566.89, the Hang Seng Index fell 1.35 percent or 267.68 points. Mainland Shenzhen Composite Index was shortly down 0.64 percent, or 12.33 points, to 1,906.18 while Shanghai Composite Index in China fell 0.45 percent, or 13.90 points, to 3,044.80.
What Should Investors Do?
Midcaps and small caps are experiencing greater selling pressure than the Nifty and Sensex, according to Yash Gupta, Equity Research Analyst, Angel One Ltd. The RBI's rate hike announcement and the Fed's hawkish remarks triggered a selloff. Additionally, FII and DII continue to sell while buying, but inflows into mutual funds have decreased over the past month. Depending on domestic news and international markets, we anticipate that market volatility will increase shortly. We advise long-term investors to invest 50% of the new fund now and hold onto the remaining 50% until the market recovers.