Indian markets tracking weaker Asian counterparts recovered sharply on Tuesday as global investors turned cautious after the Federal Reserve raised bets for higher terminal rates following strong US services data. Besides, domestically, investors were on a wait-and-watch mode for the outcome of RBI’s December monetary policy, which is scheduled to be announced tomorrow. Surprisingly, the Indian rupee rose to its highest level since November 7 against the US dollar as suspected yuan-rupee carry trade unwinds and corporate dollar outflows. The Sensex continued to decline for the third consecutive day.
The Sensex closed at 62,626.36, down 208.24 points or 0.33%. While the Nifty 50 closed at 18,642.75, down 58.30 points or 0.31%. IT and Metal shares Among the worst hit were banking, consumer durables and healthcare stocks, with significant losses. In the broader market, midcap stocks were the worst hit as investors booked profits after last week’s gains. India’s volatility index rose over 2%.
on BSE, IT and Metal The indices fell 421.16 points and 356.05 points respectively.
Stocks like Hindustan Unilever, UltraTech Cement, Power Grid, Nestle and Axis Bank were the top 5 bulls. Whereas Tata Steel, Dr. Reddy’s Lab, SBI, Bharti Airtel, ICICI Bank, IndusInd Bank, TCS and Tech Mahindra were the worst performers.
“Investors mostly remained on the sidelines as they preferred to wait for RBI’s monetary policy announcement,” said Rupak Dey, senior technical analyst at LKP Securities.
RBI is all set to present the monetary policy of December 2022 tomorrow. Instead of a fourth 50 basis point hike in this coming policy, expectations are 25-35 basis points. So far in FY23, the repo rate has been increased by 1.9% to 5.9%.
Besides, Vinod Nair, Head of Research, Geojit Financial Services said, “Significant selling in metals and IT stocks amid adverse global cues kept bears pushing domestic indices lower. In response to renewed concerns over policy tightening by the Fed The mood turned sour on strong economic data out of the US. While the easing of COVID restrictions in China benefited the demand outlook, fresh sanctions on Russian oil further added to the volatility in global oil markets. Home But investors await the RBI’s policy meeting tomorrow, which is expected to slow the pace of rate hikes in the light of easing food prices.”
Meanwhile, the Indian rupee closed at a 1-month low of 82.6150 against the US dollar as against its previous day’s close of 81.79 per dollar.
On the rupee, Anindya Banerjee, VP – Currency Derivatives & Interest Rate Derivatives, Kotak Securities said, “After crossing the spot 82, stops by importers and bank dealers may be triggered and this has pushed up the rise. USDINR forward premium The lowest level since 2011 and low forward premiums are hurting dollar supply. This is making carry trades unviable and reducing exporter hedging. Also, it is vulnerable to global shocks. weakening the rupee for
Banerjee said, “The Indian rupee has turned out to be one of the weakest currencies in a broad basket of currencies on a year-on-year basis. However, in the near term, we expect central bank intervention to emerge higher and As a result, a range of 81.50 and 82.60 may open up in the near term.”
On Nifty 50, Rupak Dey said, the benchmark took support around previous lower levels before closing slightly higher. The trend may remain sideways till the time the index stays within the band of 18600-18800. Any decisive move from either side would prompt a directional move.
On the other hand, Shrikant Chauhan, head of equity research (retail), Kotak Securities, revealed that in the past we have seen investors get cautious ahead of any important event and do some profit-booking to avoid any foul play. If the rate hike is higher than the Street’s expectations, investors may hit the panic button, which could lead to increased selling pressure.
Disclaimer: The views and recommendations given above are of individual analysts or broking companies and not of Mint.
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