Indian shares tanked on Monday Morning mirroring weakness in the Asian counterparts as hawkish commentary from the US Federal Reserve chairman Jerome Powell spooked investors. In his much-awaited speech at Jackson Hole symposium last week, Powell said the US central bank would continue to take strong action through higher interest rates.
VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services said the market expected Powell to remain hawkish at Jackson Hole but the ultra-hawkish tone of the Fed chief’s message and his warnings that Fed’s policy will “cause some pain to households and businesses” and this is “the unfortunate costs of reducing inflation” were not expected and factored-in by the market.
Powell’s hawkish commentary sent markets tumbling. At 09:16 IST, the Sensex was down 1,210.62 points or 2.06 per cent at 57623.25, and the Nifty was down 361.50 points or 2.06 per cent at 17197.40.
Shareholder’s wealth, reflected in the market cap of BSE-listed companies, fell by Rs 3.90 lakh crore to Rs 273.06 lakh crore.
Tech Mahindra, Infosys, Hindalco Industries, HCL Tech and Wipro, which count the US as their major market, were the worst hit on the Nifty, down 3-6 percent. Nestle India, Britannia and Apollo Hospitals were the few names to buck the trend to trade in the green.
All sectoral indices were trading in the red. IT stocks were among the biggest casualties, with the Nifty IT index falling more than 4 percent in the morning. Metals, banks and realty stocks, too, were hammered.
Wayforward for Investors?
Buy on dip texture of market unlikely to hold
VK Vijayakumar, chief investment strategist at Geojit Financial Services, said: “The ‘buy on dips’ texture of the market is unlikely to hold. Investors should not rush in to buy the dips now. Better wait for the dust to settle.”
More Pain For Investors Ahead
Kush Ghodasara, Independent Market Expert, said: “As an investor, this drop could be considered as a buying opportunity. Investors should start buying in parts with the next buying opportunity at 56800 which is 200-day average. I believe more correction is due in the next 3 weeks.”
Focus on Stock-Specific Ideas
Narendra Solanki, Head- Equity Research Anand Rathi Shares & Stock Brokers, said: “I think, domestic markets are right now trading at fair valuations on indices front and investors should focus on stock specific ideas. There are ample opportunities available in some pockets for long-term growth.”
Avoid fresh longs in Nifty index
Tirthankar Das, Technical & Derivative Analyst, Retail, Ashika Stock Broking, said: “On the technical front, Nifty formed an indecisive doji after a small fall hence one can expect rangebound moves ahead with high volatility. Nifty in the weekly time frame has breached the previous week’s which is the first sign of exhaustion. At the present juncture, one needs to avoid trading aggressively amid global nervousness. US Fed Chairman Jerome Powell reiterated a hawkish stance on interest rate hike denting nascent hopes for a more modest path of policy tightening. Thus, it would be sensible if one avoids fresh longs in index and book profits in trading bets. Considering the present situation, a bare minimum correction of 38.6% of the entire rally from 15,183 to 17,992 comes around 16900 followed by 50% correction at 16600. On the upside Nifty need to sustain above 17,350 with some authority for the bulls to strengthen their stance.”
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