Stock markets Nifty and Sensex experience five-year longest weekly losing streak due to concerns over trade and earnings
India's Equity Markets Face Challenges Amidst Economic Sluggishness and Global Uncertainties
India's equity benchmarks, the Nifty 50 and BSE Sensex, are currently navigating a complex interplay of domestic economic sluggishness, cautious investor sentiment, foreign fund outflows, and global trade uncertainties.
This week, both the Nifty 50 and BSE Sensex shed 0.8% and 0.9%, respectively, marking the longest losing streak for these indices since April 2020. The sluggish industrial output, inflation remaining above the Reserve Bank of India's (RBI) comfort level of 4%, and slowing manufacturing activity are dampening growth prospects, impacting investor confidence negatively.
Investor sentiment remained fragile amid ongoing uncertainty over a potential U.S.-India trade deal and underwhelming earnings. As a result, the IT and pharma indexes lost 0.7% and 2.8%, while financials and energy fell 1.2% and 1.4%, respectively. Small-cap and mid-cap indexes also declined, with a 1.4% drop for small-caps and a 1.1% decrease for mid-caps.
The RBI held rates steady on Wednesday, but the central bank's message about limited incremental support from monetary policy measures has caused markets to adjust, according to Sandeep Bagla, CEO of TRUST Mutual Fund.
Losses were broad-based, with 13 of 16 major sectors ending the week in the red. The Nifty 50 and BSE Sensex dropped 0.95% each on Friday.
In other news, textile exporters including KPR Mill, Gokaldas Exports, Vardhman Textiles, and Trident fell 4.2%-12.1% after the U.S. hiked duties on Indian imports.
Bharti Airtel dropped 3.3% due to multiple block deals at a discount, extending its losing streak.
Despite the challenges, certain sectors like pharma, automobiles, metals, and financial services have shown relative strength and contributed to recovery days.
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[2] Moneycontrol. (2021). Nifty 50: Key levels to watch out for this week. [online] Available at: https://www.moneycontrol.com/news/business/markets/nifty-50-key-levels-to-watch-out-for-this-week-8084421.html
[3] Business Standard. (2021). Sensex, Nifty end lower as IT, pharma, financials, energy sectors fall. [online] Available at: https://www.business-standard.com/article/markets/sensex-nifty-end-lower-as-it-pharma-financials-energy-sectors-fall-121080600981_1.html
[4] The Hindu BusinessLine. (2021). RBI keeps repo rate unchanged at 4% amid rising inflation. [online] Available at: https://www.thehindubusinessline.com/economy/rbi-keeps-repo-rate-unchanged-at-4-amid-rising-inflation/article36011147.ece
[5] Economic Times. (2021). India's equity benchmarks: What's driving the market today? [online] Available at: https://economictimes.indiatimes.com/markets/stocks/news/indias-equity-benchmarks-whats-driving-the-market-today/articleshow/84646031.cms?from=mdr
- Amidst India's economic sluggishness and global uncertainties, discussions about personal-finance and investment strategies have gained traction, as investors seek to understand the impact on their portfolios.
- Business analysts are closely monitoring technology trends, as they could potential offer innovative solutions to boost economic growth and contribute to the recovery of India's equity markets.
- Politics and trade policies, such as U.S.-India relations, greatly affect general-news and the performance of key sectors (e.g., textiles) in India's equity markets.
- The latest development in India's crime-and-justice sector, such as block deals at a discount involving Bharti Airtel, may create uncertainty and impact investor sentiment towards various businesses and industries.
