Key benchmark indices recorded sharp losses over the last four sessions with the BSE Sensex tanking up to 1,497 points in intra-day trade today, and the Nifty50 dropping below 17,100 with a loss of over 400-odd points. Meanwhile, the IT Index tumbled over 4 per cent dragged by the IT major Infosys which tanked 9 per cent in trade followed by Mphasis, Tech Mahindra, Mindtree and TCS. The Bank Nifty was down over 1 per cent battered by capital goods, power and realty woes.
VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services, said that the near-term, headwinds are getting stronger for the market. Globally, sentiments are negative with the dollar index above 100, 10-year yield above 2.8 percent, and the global economy expected to weaken if the Ukraine war prolongs.
Here are the factors which are dragging the markets lower on Monday:
Q4 Results Announced For Infosys and HDFC
Infosys results came worse than expected with rising attrition and weakening margins, even though growth prospects appear bright.
Meanwhile, HDFC Bank’s net interest growth NII gave a rude shoke to the D-street. The bank’s net interest margin came 20 bps lower from last year at 4 per cent. The stock was down over 3 per cent on Monday.
Weak Global Cues
US stock futures were in the negative zone on Monday after a lower closing for Wall Street on Thursday as bond yields continue their run in a rising interest rate environment. On Thursday, the benchmark 10-year US bond yield rose to 2.827 per cent, its highest level since late 2018. While, domestic 10-year bond yield was also up 0.4 per cent at 7.244 per cent. Moreover, investors will closely monitor Fed Chair Jerome Powell’s comments as he is slated to speak at the International Monetary Fund on Thursday. Today, Asian markets, too, have continued to trade in the red zone as China faces its worst Covid-19 outbreak since the pandemic began in 2019. The country’s business hub, Shanghai, which remains locked down, posted 22,248 new cases on Monday.
China GDP Q1 Numbers
China’s first quarter GDP numbers topped estimates, however, its retail sales in March fell by a more-than-expected 3.5 per cent from a year ago, reflecting the impact of the geo-political tensions and covid restrictions. The growth figures may not fully capture the shockwaves of the COVID lockdowns across several cities which also were economic centres, including Shanghai. The People’s Bank of China has, over the weekend, also initiated easing measures to reduce the reserve requirement ratio (RRR) for most banks by 25 basis points. However, there have been no rate cuts, and this measure falls short of what several economists were expecting.
Oil Prices Increase
Oil prices rose on Monday as concerns grew about tighter global supply, with the deepening crisis in Ukraine raising the prospect of heavier sanctions by the West on top exporter Russia. Brent futures were up $1.50, or 1.3 per cent, at $113.20 a barrel at 0030 GMT, and US West Texas Intermediate futures rose 98 cents, or 0.9 per cent, to $107.93 a barrel. The International Energy Agency had warned that roughly 3 million barrels per day (bpd) of Russian oil could be shut in from May onwards due to sanctions, or buyers voluntarily shunning Russian cargoes.
Nifty Technical Outlook
“The sacrosanct support of ’20-day EMA’ is positioned at 17,450 for the Nifty, which coincides with the breakout point of the previous congestion zone. Till the time Nifty holds 17,400 – 1,200, we remain hopeful of some recovery. We hope there is no aberration on the global front in the coming days and any favorable cue would certainly be a cherry on the cake. On the upside, 17,700 followed by 17,850 are the key levels to watch out for. If the Nifty has to regain any strength, it needs to surpass these barriers with some authority,” said Sameet Chavan, chief analyst-technical and derivatives, Angel One.
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