Sell-off drags markets as investors turn cautious post budget
Premium- The BSE Sensex ended down 770.31 points or 1.29% at 58,788.02. The Nifty slipped 219.80 points or 1.24% closing at 17,560.
Markets snapped a three-day gaining streak on Thursday as the budget-led investor euphoria seemed to be gradually waning off. The BSE Sensex ended down 770.31 points or 1.29% at 58,788.02. The Nifty slipped 219.80 points or 1.24% closing at 17,560.
Markets in other Asia-Pacific region were mixed on Thursday while China and Hong Kong, remained shut for the Lunar New Year holidays. Japan’s Nikkei 225 fell 1.06% and South Korea’s Kospi bucked the downward trend rising 1.67%.
According to Vinod Nair, head of research, Geojit Financial Services domestic market extended its losses following broad-based selling as global cues turned in favour of bears. “US futures were under pressure following weak earnings numbers reported by Meta (Facebook) while European markets fretted about monetary policy tightening," Nair said.
The Bank of England raised interest rates to 0.5% on Thursday and nearly half of its policymakers wanted a bigger increase to contain rampant price pressures, as the central bank warned inflation will soon top 7%. The move follows hot on the heels of a rate hike in December, marking the first back-to-back increases in Bank Rate since 2004 and reflecting urgency among MPC members to show they are on top of a growing cost-of-living crisis. In contrast with the approach taken by the European Central Bank, the BoE warned further "modest tightening" is in the pipeline, even though growth will be hurt by global energy and goods price inflation.
Siddhartha Khemka, head-retail research, Motilal Oswal Financial Services Ltd said Indian markets are witnessing a pause in its momentum as the focus now shifts away from budget to interest rate and inflation ."The forthcoming Reserve Bank of India (RBI) policy meet on 9 February will also be an important event to watch. Q3FY22 earnings has been good so far and most of the management commentary suggest Q4 numbers to remain be strong. Overall we remain positive on the market. From a sector perspective, we expect Infra, construction, cement, capital goods, affordable housing, logistics and defence to remain in focus., Khemka said.
India VIX or Indian volatility index heated off on Thursday rising 2.73% at 19.17 which is indicative of increase in anxiety and nervousness among investors.
Foreign institutional investors (FIIs) have started to buy Indian equities once again. In February so far, FIIs have were net buyers of Indian shares worth $67.70 million in February after a massive outflow of $4.81 billion last month. FIIs have been consistently selling Indian shares since October 2021. Domestic institutional investors have pumped in ₹2023.66 crore in February following a net inflow of ₹21928.40 crore in first month of the year.
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(Reuters contributed to the story)
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