Top companies

ASIANPAINT - 2846.75 (0.57%) AXISBANK - 1047.2 (-0.54%) BAJAJFINSV - 1643.85 (3.87%) BAJFINANCE - 7245.25 (3.17%) BHARTIARTL - 1228.6 (0.31%) BPCL - 602.4 (1.21%) COALINDIA - 434.1 (1.08%) HDFCBANK - 1447.9 (0.5%) HEROMOTOCO - 4722.3 (3.28%) HINDUNILVR - 2264.35 (1.1%) ICICIBANK - 1093.3 (0.88%) INDUSINDBK - 1553 (1.27%) ITC - 428.35 (0.08%) KOTAKBANK - 1785.5 (0.56%) MARUTI - 12600.35 (0.72%) ONGC - 268.05 (2.41%) RELIANCE - 2971.7 (-0.47%) SBIN - 752.35 (2.6%) TATAMOTORS - 992.8 (1.45%) TATASTEEL - 155.85 (2.06%) TCS - 3876.3 (0.92%) TITAN - 3801.8 (1.13%) WIPRO - 480.1 (1.65%)
TRENDING #BANK NIFTY 149 #ADANIPORTS 86 #ZOMATO 72

Investors lose Rs 4 lakh crore on Powell's inflation warning. What's next?

27 Jan , 2022   By : monika singh


Investors lose Rs 4 lakh crore on Powell's inflation warning. What's next?

NEW DELHI: Days of easy money-making are gone, and investors are finding it in a harsh way.

Within minutes into trading on Thursday, domestic stocks erased Rs 4 lakh crore from investors' portfolios.

By 11 am, the combined market value of BSE listed stocks fell Rs 4.01 lakh crore to Rs 258.77 lakh crore from Rs 262.78 lakh crore on Tuesday.
The sustained rich valuations at which global stocks were trading were driven partly by hopes of sustained accommodative policy stance by central banks. That was irrespective of the fact that inflation was inching higher in the past several months and never looked 'temporary' as central banks would have wanted financial markets to believe.
The US Fed's commentary overnight was a fair admission.

The hawkish commentary by Fed Chair Jerome Powell made the market wonder whether there will be four or five rates this year.
Just two days ago, three hikes were what the market was expecting. The dollar jumped and fears of foreign outflows gripped the domestic market as traders flocked to lighten positions on the day of futures and options expiry, ahead of the all-important Budget and state elections.

When the press asked Fed Powell whether the tail risk that people are worried about i.e. 50 bps hike or more frequent rate hikes of more than four were off the table, Powell said that they were not off the table.
"So that actually spooked the market. You know the set-up we have now is that it is very likely that the violent moves of the bond market would continue. When otherwise economic data is beginning to slow, the new mandate and the new pivot of the Fed is to tame inflation. That set up actually is good for the dollar, bad for bonds, bad for equities and of course bad for emerging market currencies," said Maneesh Dangi of Macro Investor & Advisor.
Should investors be too worried?
There are two ways of looking at it, said Aditya Narain of Edelweiss Securities.

"The first is to react on a day-to-day basis which is what is happening with the market at this point in time. The other is to sit back and say okay what are the risks that are out there for the markets for the next 6 to 12 months and what are the upsides for the market," Narain said.
"Our view really is that this market is going to be up and down during the course of this year. Our target for the end of the year is about 18,000 on the Nifty50 and to that extent, if you see the market going off meaningfully from here, it starts becoming attractive. If it starts to bounce back in a hurry, you need to settle down a little bit. That is the way I would see it rather than reacting from an immediate perspective. I do not think it is going to be a difficult year," he added.
Pankaj Pandey, Head Research at ICICIdirect.com said that the cost of liquidity will go up and the quantum of liquidity is expected to come down, which will create volatility. Pandey said the RBI would be forced to sort of take rate hikes and that volatility is here to stay.

He felt a lot of new-age companies could be a lot more under pressure along with some of the tech names or the high PE multiple.
"Having said that a rising interest rate scenario is good for banks in general and till now whatever numbers we have seen for some of the key players like say for example Bajaj Finance or Axis Bank, I think retail and rural as a segment are doing well. Along with that if the budget provides the necessary push to the capex, credit growth is what would drive the next leg of earnings for banking. Valuations on the banking side are not stretched and which is where we believe that banks overall can sort of cushion the market to some extent along with some commodities," Pandey told ET Now.



0 Comment


LEAVE A COMMENT


Growmudra © 2024 all right reserved

Crafted With ZEE WEB VALLEY

Partner With Us