Rs 7 lakh crore gone in 4 days as Nifty bulls can't handle higher-for-longer stress

Headline equity indices Sensex and Nifty today fell for the fourth consecutive session, with investors left poorer by nearly Rs 7 lakh crore in four days amid worries over higher-for-longer interest rates and rising geopolitical tensions. Sensex crashed over 900 points while Nifty gave up its support at the 17,600 level during the session.

Today's loss in market capitalisation was at Rs 3.8 lakh crore as the market value of all listed companies on BSE dropped to Rs 261.4 lakh crore. In the last 4 trading sessions, Sensex has lost over 1,500 points.

Here are the 8 key factors empowering bears on Dalal Street:


Wall Street reported its worst day so far in 2023 on Tuesday. The S&P 500 fell 2%, its sharpest drop since the market was selling off in December. The Dow Jones Industrial Average lost 697 points, or 2.1%, while the Nasdaq composite sank 2.5%.

Other Asian stocks, too, were under pressure today. Japan's Nikkei lost 1.34% to close at a one-month low.

2) Geopolitical tensions
Escalating geopolitical tensions with the West over Ukraine after Russian President Vladimir Putin has suspended a landmark nuclear arms control treaty, announcing that new strategic systems had been put on combat duty.

3) Fed fear
Traders are awaiting the release of the minutes of the FOMC meeting, which may give cues on the Fed's future rate hike plans.

"The US macro data continues to dictate equity markets globally. The US markets reacted sharply negatively to the series of economic data indicating that the process of disinflation is slow and, therefore, the Fed will have to continue raising rates longer than expected earlier," said Dr V K Vijayakumar of Geojit Financial Services.

These negative US equity market trends are impacting equity markets everywhere, and India cannot be an exception to this trend, at least in the near term, he said.

4) Adani stocks
The non-stop sell-off in Adani Group stock also added to the bearish mood on Dalal Street. With Adani Enterprises losing the most at 8%, all 10 Adani stocks were in the red. The cumulative loss in market capitalisation of the Adani counters was around Rs 40,000 crore.

5) RBI minutes
Traders are also awaiting the release of the minutes of the Reserve Bank of India (RBI) monetary policy committee later on in the day to gauge the central bank's mood. Earlier in the month, the RBI had hiked the repo rate by 25 basis points, taking the total quantum of rate hikes in the current cycle to 250 bps since May 2022.

6) Technical factors
Nifty's crucial support zone was seen at the 17,800 level, and once that was breached, it triggered a fresh round of profit booking with the next major support visible near 17,350 levels of the significant 200-DMA zone.

"The entire February month has been into a consolidation phase and very soon prices may break these shackles. Traders are waiting for some triggers, and with key events lined up on the global front, markets are likely to react more to global cues," said Sameet Chavan, Chief Analyst-Technical and Derivatives, Angel One.

7) FII Bears
With dollars shifting to China and other relatively cheaper emerging markets, foreign investors have been net sellers to the tune of Rs 31,000 crore so far in the calendar year 2022.

However, market watchers note that foreigners have started covering their short positions in index derivatives and both FIIs and local institutions were net buyers in cash markets in yesterday’s session.

8) Bond yields
US 2-year Treasury yield rose to an over three-month peak overnight, while the 10-year yield hovered close to 4% after jumping 12 basis points on bets of multiple Federal Reserve rate hikes.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)