Shares fall for the third day on global cues

On Thursday, the benchmark indices Sensex and Nifty fell 1.06% and 1.01% to 59,464.62 and 17,757 respectively. The BSE Sensex is down 2.87% so far this week, while the National Stock Exchange’s Nifty index fell 2.73%. The indices are headed for their worst weekly performance since the week of December 13, when they lost 3%.

Three-day declining streak has almost wiped out investors’ wealth 6.8 trillion. “Domestic equities closed lower following weak global cues on possibility of Fed raising interest rates in the near term. Nifty fell 1%, while broader markets took the lead with Nifty Midcap and Smallcap falling 0.16% and 0.05% respectively. The indices outperformed,” said Mitul Shah, Head of Research, Reliance Securities.

Barring Nifty Metal (+0.52%) and Nifty Realty (+0.23%), most sectoral indices closed lower. Nifty Pharma was the biggest loser at 1.66%, followed by Nifty FMCG (-1.15%) and Nifty IT (-1.01%).

“US equities edge sharply lower after a diversified set of corporate earnings. Markets continue to worry about higher US Treasury yields and tighter monetary policy by the Fed. 10-year Treasury yield hit a high of 1.9%. Investors look to next week’s Fed policy meeting for more clarity on central bankers’ plans to rein in inflation. Last week’s data shows US consumer prices have risen sharply in December.”

Rising inflation, bond yields and concerns over the Fed’s moves have also prompted foreign institutional investors to withdraw money from markets like India.

“Continuing concerns over global inflation and a possible hike in Fed rate acted as major headwinds for the domestic market for the third day. Higher volatility due to rising bond yields is putting pressure on foreign investors to exit. Vinod Nair, Head of Research, Geojit Financial Services, said, “Recent earnings have failed to excite the market, with ongoing global volatility eroding investor confidence.

FII sells Indian equity worth $651.1 million 4,831.25 crore netted so far in January, while domestic institutional investors have bought equities worth Rs. Data from Bloomberg shows that 6,391.73 crores so far.

Brent crude prices hit a seven-year high after a drone attack on oil tankers of Abu Dhabi National Oil Company (Adnok) on Monday, raising concerns about inflation. Brent crude was up 0.41% at $88.02 a barrel on Thursday.

Experts believe that volatility will remain ahead of the budget and elections to several states.