Stock Market Today: Snapping two-day gains, the markets bled on Wednesday amid investors fretting over rising inflation and aggressive policy tightening by central banks. India’s 10-year benchmark yield was down marginally to 7.41 per cent, from its previous close of 7.48 per cent. Asian stocks fell in volatile trade, failing to extend an overnight Wall Street rally, while the Japanese yen hit a fresh 24-year low against the dollar. The BSE Sensex lost 700 points while the NSE Nifty slipped below 15,400, with the BSE market capitalisation falling Rs 3.36 lakh crore to Rs 237.27 lakh crore from Rs 240.63 lakh crore a day ago.
Dr VK Vijayakumar, chief investment strategist at Geojit Financial Services, said: “Pull-back rallies can be sharp and it was sharp yesterday. The important question is: will this continue? There is no economic news, except the softness in crude, to sustain the rally. There is no reason for FIIs to change their selling strategy since the dollar continues to be strong and US bond yields are attractive and expected to rise further. The large-caps which bounced back sharply yesterday are fundamentally strong stocks. Therefore, the best investment strategy now should be to buy these high-quality names in small quantities, on dips.”
Here Are Key Reasons Behind the Market Fall Today:
Jerome Powell’s Testimony
US Federal Reserve chair Jerome Powell is due to start his testimony to Congress later in the day, with investors looking for further clues about whether another 75-basis point rate hike is on the cards at the Fed’s July meeting. Concerns that the Fed may continue to hike rates aggressively despite looming concerns of recession in the world’s largest economy is weighing on investor sentiment. As such, there was some cautiousness among market participants ahead of Powell’s testimony.
Weak US Futures
US futures down up to 2 per cent, indicating a gap-down start for Dow Jones, S&P 500 and Nasdaq later tonight. While markets such as Japan, China, and Australia edged up to 0.3 per cent lower, those in Hong Kong, Taiwan and Korea were down up to 2 per cent.
Rupee Hits Fresh Record Low of 78.29
The Indian rupee reached a new record low of 78.29 against the US dollar on Wednesday as persistent foreign fund outflow from the financial markets, risk aversion in global equities, elevated crude prices put pressure on the native currency. The fall comes amid selling in emerging market equities and currencies ahead of the US Fed Chair Jerome Powell’s testimony to US Congress later in the day. According to foreign exchange analysts, the local unit has also been hampered by heightened concerns over India’s inflation and current account deficit and elevated crude oil prices.
Persistent weakness in the rupee intensifies foreign outflows. Data showed foreign equity outflows have topped Rs 40,000 crore in June so far, taking year-to-date Rs 2,07,195.
Nifty Technical Outlook
“Even as US markets ended firm in overnight trades, weakness in most of the Asian indices could weigh on domestic benchmarks in early trades. On the other hand, Nifty’s technical charts suggest ‘Bullish Morning Star Candlestick Pattern’. Nifty’s make-or-break support for the day is seen at 15,453 and then good support at the recent low of 15,181 mark.”
“We suspect Bank Nifty too is aiming for a significant rebound with the biggest support seen at 32,155 mark. Upside, however, may be capped on reports of fears that the global economy will slow dramatically amidst an aggressive tightening from major central banks across the globe to rein in record inflation that has rattled the sentiment,” he added.