Investors lost over ₹6.97 lakh crore due to the 4-day sell-off; Can GDP data revive?

On February 22, BSEMarket cap of listed companies 2,61,33,879.49 crores. it is less than 3,87,228.19 crore from the last print.

Listed in BSE’s market cap on Tuesday equities was around 2,65,21,111.74 crores.

The market is in the red since February 17. A day earlier (16 February) the market valuation was around 2,68,30,985.60 crores. From this level till date, there has been a drastic fall in the valuation of BSE equities 6,97,106.11 crores.

Sensex and Nifty 50 declined over 1.5% each today on weak global cues as investors focus on monetary policy minutes from RBI and US Fed. The benchmark has come down to its lowest level since October 19 last year.

The Sensex closed 927.74 points or 1.53% lower at 59,744.98. Whereas on Wednesday, the Nifty 50 closed at 17,554.30, down 272.40 points or 1.53%.

Broad-based selling was seen in all the indices. The BSE Sensex Next 50 declined by 623 points. While the midcap and smallcap indices have declined by more than 1 per cent.

Banking stocks were the biggest losers compared to their peers. BSE Bankex declined by about 746 points. Among other sectoral indices, IT index declined by 349 points and metals by 338 points on BSE. Auto and consumer durables also declined by 339 points and 382 points respectively. Capital Goods declined by 426 points. The financial services and energy indexes were down 1.7% and 1.5%.

“Indian equities declined today on weak global cues due to Russian stand on conflict and likely stance on interest rates by Fed and RBI,” said S Ranganathan, head of research at LKP Securities.

Further, market expert Sugandha Sachdeva said, “Markets are extremely cautious as a recent spate of strong economic data from the US, signs of a resilient economy and warmer-than-expected inflation raised concerns about higher Extreme rates in America.”

Sachdeva said, “This has dented sentiments and with Wall Street witnessing widespread selling in major indices, we are likely to see a soft opening for the domestic markets. Usually, a strong economy is a positive sign for the markets.” Granted, but since the Fed is currently battling high inflation, a slightly softer economy is what is needed to further ease price pressures.”

India is set to release the quarterly GDP estimates for the period October-December 2022 on 28 February.

Last week, the overall BSE-listed equity market cap in 1.10 lakh crore. Between February 13 and February 16, the valuation rally was over 2.54 lakh crore. However, the sell-off on February 17 brought back some of the gains.

What will be the GDP figures in Q3?

According to Jyoti Prakash Gadia, Managing Director, Resurgent India, with continuing uncertainties on the global front and stable core inflation trends, the growth prospects in the coming quarters are not very encouraging. Across the world, various agencies are predicting a downgrade in the growth projections of most major economies, which will impact India as well. The initial bearish trend coupled with high inflation levels and persistent supply side constraints will have an adverse impact on production.

While agriculture is expected to perform reasonably well, he added that “the overall demand growth has not been substantial and as a result, third quarter GDP growth is expected to be lower, in the range of 4% to 4.5%.”

Gadia concluded, “While overall full-year growth prospects are converging towards 6.5% to 7.%, Q3 and Q4 rates are also likely to be impacted by a ‘base effect’, resulting in lower growth expectations.” The next fiscal, however, may signal well on the GDP front with positive results from the government’s thrust on infrastructure and logistics development.”

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