Market Crash Today: Sensex, Nifty on Wednesday dropped for the fourth session to hit over two-week low tracking losses in global equities. Sensex crashed over 900 points while Nifty gave up its support at the 17,600 level during the session. Both Sensex and Nifty lost around 1.46 per cent and 2.71 per cent so far this year
Among the global markets, S&P500 and Dow Jones lost 2 per cent each while Asia Nikkei fell 1.4 percent and Heng Seng slipped 0.3 per cent.
Today’s loss in market capitalisation was at Rs 3.8 lakh crore as the market value of all listed companies on BSE dropped to Rs 261.4 lakh crore. In the last 4 trading sessions, Sensex has lost over 1,500 points, with investors left poorer by nearly Rs 7 lakh crore.
Gloom Over Global Markets
Wall Street reported its worst day so far in 2023 on Tuesday. The S&P 500 fell 2 per cent, its sharpest drop since the market was selling off in December. The Dow Jones Industrial Average lost 697 points, or 2.1 per cent, while the Nasdaq composite sank 2.5 per cent.
Other Asian stocks, too, were under pressure today. Japan’s Nikkei lost 1.34 per cent to close at a one-month low.
Fed minutes
Global markets are on edge as investors brace themselves for the release of the Federal Reserve meeting minutes later on February 22. There is concern that the minutes will show US policymakers remaining resolutely hawkish, which has led to a drop in market sentiment. The minutes are expected to reveal how many members saw the case for a larger hike at the January 31 to February 1 meeting, and whether they anticipated the need to raise interest rates higher than previously thought to tackle inflation. This comes as the recent US producer price index rebounded more than expected in January, leading to talks about the need for further interest rate hikes in the coming months. Investors are closely monitoring the Fed’s stance on interest rates and inflation, as it could have significant implications for the global economy.
RBI minutes
The Reserve Bank of India is set to release the minutes of its February rate-setting panel meeting later on February 22 and investors are keeping a close watch on them for cues on the trajectory of rate hikes. The minutes will provide insight into the RBI’s decision-making process and may give an indication of whether there will be any further rate hikes in the near future. Additionally, investors will be paying attention to RBI Deputy Governor Michal Patra’s speech at the first G20 Finance Ministers and Central Bank Governors meeting and the second G20 Finance and Central Bank Deputies Meetings for any clues on potential rate hikes.
Nifty Technical Factors
Nifty’s crucial support zone was seen at the 17,800 level, and once that was breached, it triggered a fresh round of profit booking with the next major support visible near 17,350 levels of the significant 200-DMA zone.
“The entire February month has been into a consolidation phase and very soon prices may break these shackles. Traders are waiting for some triggers, and with key events lined up on the global front, markets are likely to react more to global cues,” said Sameet Chavan, Chief Analyst-Technical and Derivatives, Angel One.
FII selling
Foreign investors have been selling Indian equities since the start of the year, with sales amounting to around $3.37 billion so far. In 2022, they liquidated around $17.21 billion worth of Indian equities. However, there are signs that this trend may be reversing, as foreign investors started buying Indian equities last week. Some analysts believe that this renewed interest in local equities is due to the attractive valuations on offer. Despite concerns about the Adani Group and rising inflation, the Indian stock market remains attractive to foreign investors. The recent buying activity by foreign investors suggests that they are optimistic about the prospects for Indian equities in the coming months. Nevertheless, the Indian economy still faces challenges, and it remains to be seen whether the recent uptick in foreign investment will be sustained over the long term.
December quarter earnings
India Inc’s profitability moderated in the third quarter of FY23, with corporate earnings coming in below analysts’ expectations. The underperformance was driven by the commodities sector, while financials and autos performed relatively well. The slowdown in consumption was broad-based, affecting both staples and discretionary spending, and this also had a negative impact on corporate earnings. However, analysts remain cautiously optimistic, with expectations that the good Rabi harvest and declining CPI inflation will gradually boost demand for staples. A Motilal Oswal Research report indicated that 57 percent of the companies in their universe either met or exceeded profit expectations, suggesting a decent spread of earnings across sectors.
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