Soon after a flat opening on January 10, the Indian equity market went into a downward trajectory as a weak start to Q3 earnings season and global macro concerns spoiled the investor sentiment.
At 1:15pm, the Sensex was down 682.60 points, or 1.12 percent, at 60,064 and the Nifty declined 203.80 points, or 1.13 percent, to 17,897.40. About 1148 shares had advanced and 2,034 shares declined, while 138 shares were unchanged.
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Except Nifty Auto, which clocked marginal gains, all other sectoral indices were trading in the red. Bharti Airtel, SBI, HDFC Bank and TCS were the top losers on the 30-pack Sensex.
Let's look at the factors dragging the market down:
Weak start to the earnings season
Tata Consultancy Services (TCS) on January 9 reported a 10.98 percent on-year increase in its consolidated net profit at Rs 10,883 crore for the quarter ended December 2022 (Q3FY23).
This was, however, lower than the analyst expectation of Rs 11,247 crore. The IT behemoth also highlighted that client spends were tightening in Europe. Global brokerage firms believe that the stock's valuation at 26 times one-year forward earnings looks unjustified, given the worsening macro environment and continued slowdown.
Global markets cautious, US futures lower
On Tuesday morning, futures tied to the Dow Jones Industrial Average shed 83 points, or 0.25 percent, while the S&P 500 fell 40 points, 0r 0.36 percent. Nasdaq 100 futures were just below the flat line. European markets also opened mixed with FTSE down 0.35 percent.
In the normal trading session on Monday, only Nasdaq ended in the green, while Dow erased a 304-point gain and closed down almost 113 points. The S&P 500 fell 0.1 percent.
FII selling continues
"In India, the major drag has been sustained FII selling. This is the data to watch," said Dr VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services.
In 2022, foreign institutional investors sold Indian stocks worth Rs 1.27 lakh crore. The momentum has continued into 2023. So far in January, they have sold Rs 4,988.33 crore in equities.
All eyes on Powell speech and CPI data
Federal Reserve chair Jerome Powell will speak at the Sveriges Riksbank International Symposium in Stockholm, Sweden, on Tuesday. His comments on inflation and rate hike trajectory, if any, will be keenly monitored after wage growth slowed in the US in December.
"Some strategists expect Powell could say more time is needed to show inflation is under control," Deepak Jasani of HDFC Securities said.
Both India and the US will also release their CPI (consumer price index) inflation numbers on January 12, which will indicate the path for further monetary tightening.
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