With a sharp fall in the domestic stock market on Monday, there was a decrease in the wealth of investors by about Rs 4 lakh crore. For some time BSE Sensex broke 54,000 level, while Nifty had come down to 16,150 level before recovery.
The market capitalization of all the stocks listed on BSE declined by Rs 3.74 lakh crore to Rs 255.17 lakh crore due to the sharp fall in the first 30 minutes.
Some important factors of the fall in the market …
Rupee hits record low
Strong US jobs data and the possibility of an aggressive rate hike by the Fed, strengthened the dollar against emerging market currencies and the rupee was no exception.
The rupee reached the level of 77.1325 per dollar with great weakness in early trade. With this, the domestic currency surpassed its previous record low of 76.98 per dollar on March 7.
Selling of FPIs As far as FPI outflows are concerned, weak rupee and good valuations do not bode well for India. Data shows that foreign portfolio investors have withdrawn Rs 6,417 crore so far this month and have sold Rs 1,33,579 crore so far in 2022.
A depreciation in the rupee reduces equity returns of FPIs. On the other hand, having good valuations is also not helping.
VK Vijayakumar, Chief Investment Strategist, Geojit Financial Services, said, “Despite the fall, Nifty50 is trading at 19 times its expected earnings for FY23.
This is higher than the long-term average of 16 times. This is definitely not a buyable valuation.”
Good data on US jobs
Non-farm payrolls data released on Friday showed that jobs increased by 4,28,000 in April. Improvements in jobs data reflect the strength of the US economy despite a weak GDP growth during the first quarter.
This has raised fears that the US Fed may continue to aggressively raise interest rates until inflation is under control.
Like the US and Asian markets
on Thursday, the US stock market closed with a fall on Friday. Poor sentiment put pressure on Asian markets.
Most Asian markets lost up to 2.5 per cent. Japan’s Nikkei index fell 2.3 percent. Markets in Thailand and Korea fell up to 1.7 percent.
Australia declined 1.8 percent. At the same time, markets in Hong Kong and China remained closed due to the holiday.
Nifty50 made a doji candle on the daily chart on Friday. On the other hand, in the fourth week in the weekly chart, the index formed a bearish candle, which indicates that the bears dominate the market. The index was trading below its key moving averages.
Analysts believe that the market remains volatile and relief is unlikely in the near future.