Here are 5 things that are destroying the market
The bears underestimated Dalal’s approach and strengthened their positions in Indian equities on Monday as concerns about inflation and fears of a possible Fed rate hike dampened investor sentiment.
What influences the market today
Markets to remain under watch ahead of several central bank meetings
“The 90-year gap opened as global financial markets surged, with U.S. bond yields in May climbing to a 14-year high of 3.15% and the dollar index rising above 104 levels. US futures fell about 1%. On the inside, India’s inflation data should be released today due to possible market turmoil. As such, the market will remain focused on the various central bank meetings this week,” said Hemang Jani, head of equity strategy at Motilal Oswal Financial Services.
US Inflation: US inflation is estimated to hit a 40-year high in May, accelerating to 8.6 percent from a year earlier. Rising prices spurred trading on Wall Street on Friday.
Fear of a sharp Fed rate hike: Following the US inflation news, the US Federal Reserve is expected to continue raising interest rates to help prices long after the crisis. Their meeting took place on Tuesday. A two-day FOMC meeting is scheduled for June 15. Growing fears have seen 10-year US Treasury yields top 3% for the first time in three years.
Oil markets volatility: oil continued to lose three days in a row, as investors expect further interest rate hikes from the US Federal Reserve. Brent and VTI fell 1.4% in trading to $120 and $118 per barrel, respectively.
India is to release inflation data for May on Monday, June 13. Economists expect the consumer price index (CPI) to fall to 7.10 percent in May from 7.7 percent in April, according to a Reuters poll.
The Indian rupee fell to 78.15 against the price of oil in US dollars. The Rs 30.6 billion drawdowns in India’s reserves in June also hurt the country’s finances.
In addition, foreign investor buyouts (REITs) have eroded investor confidence. REITs have been sold for eight consecutive months, paying out Rs 13,888 crore in June. As a result, REITs sold 1,81,043 shares this year.
Indian markets will be stable if US markets are stable
“Market conditions are weak in the short term.” Inflation in May was 8.6%, compared to market expectations of 8.3%. The Fed should be more aggressive with a series of 50 base rates, raising it above 3.5% in mid-2023. This situation is bad for risky assets like stocks, especially in the context of the global economy. The Indian market will be stable if the US market is stable. Thus, investors can wait and watch until market conditions clear up. The PII coin rose by 7.1%, indicating the good health of the Indian economy. VK Vijayakumar, head of investment strategy at Geojit Financial Services, said long-term investors can take advantage of the downturn in the market to buy high-quality products focused on products. These are jewelry, banking, telecommunications, and exports.