Global jitters jolt markets – The Hindu BusinessLine

India’s stock and currency markets went into a tailspin on Friday as traders feared an impending global crisis triggered by the unprecedented interest rate hike scenario presented by the US Federal Reserve.

The rupee traded higher at 81 against the dollar before closing at a new high of 80.99. Sensex and Nifty fell as much as 1.73 per cent on increased selling by foreign portfolio investors (FPIs) and retail investors. The Sensex closed at 58,098, down 1,020 points. Nifty closed 302 points down at 17,327. Analysts said both the indices are close to breaching key support levels, which indicates further downside.

to hold on to

US Fed chief Jerome Powell has indicated a further rate hike of 2.25 per cent this year and 0.25 per cent next year. Experts say that in the coming weeks, the Indian stock market will match the US markets. Major equity indices in the US are down 18-24 per cent so far in 2022, while the Sensex and Nifty have fallen less than 5 per cent from their highs.

Rohit Srivastava, Chief Strategist, IndiaCharts said, “Friday was just the beginning. The market can see a repeat of the Wall Street crises of 2001 and 2008. Even then, Indian markets continued to rise for several weeks, while benchmark indices in the US were down sharply. The decoupling principle, which was the reason for the rise in Indian markets, only works until the market catches up with the reality of quicksand, that global liquidity is disappearing. ,

Srivastava says that Nifty will touch the level of 14,500 by December. “The spike in India’s bond yields on Friday is a major indication that the Reserve Bank of India (RBI) is lagging behind in raising interest rates. They will have to be more aggressive and when that happens, Nifty and Sensex will have no basis as the rupee will be in a free fall against the dollar.

As per a Kotak Securities report, the USD-INR pair will trade in the 79-83 range for the rest of FY13 (and average around 80.2 in FY13), with RBI FX intervention. Meanwhile, India’s foreign exchange reserves declined by $5.219 billion to $545.652 billion for the week ended September 16. Overall, reserves have declined by $61,657 billion since the end of March, partly due to RBI’s intervention in the foreign exchange market to control volatility in the domestic currency.

Darshaw CEO Baman Mehta said, “We have repeatedly emphasized in our reports that it is important for the Nifty to stay above 17,116 on a weekly close basis. Failure to do so would result in a double top pattern with a target of around 16,300. The March low of 15,671 remains a key support on a monthly close basis. The monthly close below this will continue the down-move in the medium term. On the other hand, the weekly close above 18,114 is crucial for an upward move since the June low of 15,183 continued. However, it is quite clear that Nifty is in a secular upmove and in a less significant position, it will be only with the quarter above the October 2021 high of 18,604. Without a quarterly close above 18,604, Nifty would still remain open for downside in the medium term.

FPI sell shares

FPIs sold shares worth Rs 2,900 crore in the cash segment. They sold index futures worth Rs 3,372 crore and stock futures worth Rs 2,990 crore on Friday, according to exchange data. The data showed that retail investors were net sellers of Rs 255 crore in the cash segment. After falling more than 1.5 per cent on Thursday, US indices fell 1.4-1.6 per cent on Friday. India’s benchmark bond yield rose to 7.39 per cent from 7.23 per cent in just one day.

Published on

23 September 2022

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