Mumbai : Stocks remained under pressure on Friday after central bank monetary policy meetings around the world, pointing to concerns over twin risks: rising global inflation threatens the economic recovery and the rapid spread of the new Covid-19 version. Spreading.
In its latest policy meetings, the US Federal Reserve took a sharp turn while the Bank of England raised interest rates on Thursday. This can affect the flow of liquidity, particularly backing equities, to emerging markets.
The BSE Sensex ended 889.40 points or 1.54% lower at 57,011.74 and the Nifty fell 263.20 points or 1.53% to 16,985.20.
“The emergence of new Omicron tensions, inflation concerns and swift turnaround by global central bankers have increased volatility in equity markets across the world, including in India. With inflation rising in countries around the world, all eyes are on central bankers and the pace of liquidity normalization they have adopted. India has started seeing new cases of omicrons, but the real impact will be known in the next month or so as seen in previous waves of Covid-19. Shibani Kurian, Senior Executive Vice President and Head of Equity Research, Kotak Mahindra Asset Management Company, said, “The pace of vaccination in India continues to improve.”
According to him, the market direction will largely be determined by any third wave of Covid, inflows from domestic investors and FIIs, demand trend in the next few months and volatility in input cost inflation.
Markets were mostly lower in other Asia Pacific countries. Japan’s Nikkei 225 fell 1.79%, the Shanghai Composite in China fell 1.16%, and in Hong Kong, the Hang Seng index was down 1.14%.
According to Joseph Thomas, head of research at Emkay Wealth Management, the main trigger was the tightening of liquidity by the Fed and fresh indications of a hike in interest rates by the Fed in 2022. “The flight of money, which hit the shores of emerging markets, as quantitative easing began with the outbreak of the pandemic, is slowly finding its way back to where it came from, a feature that even with earlier tapering With enthusiasm over the Union Budget, this trend may intensify before normalcy,” he said.
India’s volatility index, or fear index, closed 2.78% higher at 16.34 on Friday, indicating a rise in worry and panic among investors.
Ajit Mishra, Vice President of Research, Religare Broking Ltd. said, “Apart from the tightening of the policy, the sharp rise in COVID cases globally has renewed the concerns of the participants, and we feel that this is not any big positive. Without it, it can grow further.”
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