Market wipes out 4 lakh crore in first week of calendar year 2023

NEW DELHI: The first week of calendar year 2023 has brought worrisome news for investors as key benchmarks - Sensex and Nifty - fell up to 2% and over Rs 4 lakh crore of investors wealth was wiped out from the market.  

The BSE Sensex gave up its 60,000-level on Friday to close at 59,900 (down 452.90 or 0.75%) while the broader Nifty50 slipped by 132 points to close at 17,859. During the week ended on Friday, Sensex shed about 1,141.50 points (-1.87%) while the Nifty fell 242.45 (-1.34%).

The market capitalisation of all listed companies on the BSE declined by Rs 4.02 lakh crore to Rs 279.78 lakh crore this week.The market has turned bearish as the minutes of the last FOMC meeting indicated that the US Federal Reserve is keeping the room open for more rate hikes to control inflationary pressure.

Investors have also turned cautious ahead of the earnings season after few major firms raised slowdown concerns. The NSE IT Index fell by 2% on Friday, ahead of the start of Q3FY23 results starting next week. The IT industry is expected to face a tough H1CY23. Tata Consultancy Services (TCS) lost 3% on Friday and was among the biggest Nifty laggards. Infosys fell 1.74% while Tech Mahindra shed 2.54%.

“Upcoming key US jobs data is expected to be encouraging which would influence the next Fed’s policy. The market already remains sensitive to FIIs selling and IT stocks traded with deep cuts ahead the release of corporate earnings next week as the growth is anticipated to be muted,” said Vinod Nair, head of research at Geojit Financial Services.

Foreign institutional investors (FIIs) sold Rs 2,902.46 crore worth of equities on a net basis on Friday, as per provisional NSE data.  As per Christopher Wood, global head of equity strategy at Jefferies, Nifty 50 is trading above its long-term average PE (Price-Earning) multiple and valuations in India have turned undoubtedly challenging.“If Asia looks better in aggregate on comparative valuations, there is one market where valuations are undoubtedly challenging,” Wood said in a note.