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Significant pain though has been seen in the broader markets. The Nifty Midcap index is down 9% since closing of January 3, while the Smallcap index has already declined 11% from the close of January 3. v
Multiple factors can be attributed to the fall in Indian equities, mostly to the developments across the globe. The handover from Wall Street last Friday was weak, owing to a hotter-than-expected jobs report, which has not only put January, but hopes of a Fed rate cut in March off the table as well.
In fact, Bank of America now does not expect a single rate cut in 2025 from the Fed and has expressed fears of a rate hike instead.
The US Dollar index is now trading near the mark of 110 and a stronger greenback has had an impact on all Emerging Market currencies, particularly the rupee.
The Indian currency made a new low of 86.59 on Monday against the US Dollar.
Adding to the worries is the rise in the US 10-year treasury yield, which is now nearing the 5% mark. The last instance of that happening was back in October 2023 and before that, in July 2007.
Crude oil prices are not helping matters either, with Brent rising to the highest level in five months, crossing the mark of $80 per barrel. The rise in crude oil prices has taken oil sensitives to the cleaners, be it OMCs like HPCL, BPCL or aviation stocks like IndiGo, or even paint or tyre stocks, who depend on crude derivatives for their raw material.
“My sense is till the 20th of January, and I have been repeatedly saying this since almost a month, that there is not much of direction that you would have in terms of the market. It would only be uncertainty, which is tending to be negative. And growth needs to still come back. We have not seen a Q2 which was very encouraging. Q3 hasn’t started off, except for the TCS spark, so we will have to wait for these things to pan out, and which is great news for long term investors. I don’t see the India story fizzling out in that sense, but it is a global setup that’s impacting us. Second half of this kind of a market could probably be more result driven, earnings driven, rather than just a news flow around certain stocks. But I wouldn’t hazard a guess whether the market is yet in a position to bounce back very soon. In fact, the only glimmer of hope seems to be the budget, because that could get things moving from a slightly longer-term perspective,” Prakash Diwan, market expert told CNBC-TV18.
First Published: Jan 13, 2025 2:52 PM IST
