Markets tank on institutional selling amid rising rate fears, expert predicts savage correction

"IT, metals, consumption plays are collapsing... something has changed globally," said Navneet Daga , Vice President, Yes Securities.

Published: 24th January 2022 02:40 PM  |   Last Updated: 24th January 2022 03:10 PM   |  A+A-

Nifty, Sensex, BSE, NSE

Image used for representational purpose only. (Photo | PTI)

Express News Service

MUMBAI: Indian shares tanked Monday on relentless selling by FIIs who have net sold almost Rs 9000 crore of equities so far this calendar year on rising inflationary expectations and the rising cost of capital in the face of a spike in crude oil prices. 

Such was the selling momentum, a key technical index level was taken out with consummate ease, causing benchmark indices like Nifty and Sensex to capitulate in its face.

The Nifty traded 2.6% lower at 17161.55 with 48 of 50 Nifty constituents in the red and the Sensex traded down 2.5% with all 30 major stocks having declined intraday Monday.

A key technical level at 17381 gave way, triggering stop losses and escalating the correction. 

The correction in mid-caps was deeper, underscoring the pain among retail investors, many of whom were first-timers to the stock markets since the pandemic emerged in March 2020. 

The NSE Midcap 150 traded down almost 4%. With Monday's fall, the midcap index moved into negative territory for calendar year, following in the footsteps of the benchmark Nifty and the Sensex. 

Asked whether the market will get support at its December 20 low of 16410.2, ace investor Vijay Kedia, MD, Kedia Securities, said he didn't think so.

"You get a dead cat bounce when the cat is dead. The cat has yet to die for it to bounce,"  he said, remarking that the correction looked starker with "global inflation and rising interest rates" posing a risk to stock markets. 

The Nifty made a low of 16410.2 on December 20 last year from where it bounced to a high of 18350.95 on January 18. Since then the Nifty has shed 1190 points. 

Navneet Daga, Vice President, Yes Securities, believed the correction this time around would be more savage with the best performing parts of the market tanking globally amid fears of a rise in the cost of capital due to rising inflation. 

"IT, metals, consumption plays are collapsing... something has changed globally," Daga said. 

In the fiscal year to date, FIIs have sold equities worth Rs 38782 crore, with the bulk having happened in December and so far this month. 

The rising inflationary expectations were reflected in the 35 bps rise in the Indian ten-year bond yield to around 6.65%.



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