Stock Market: China theme weighing; caution on affected sectors seen in street    

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By S Jha

New Delhi, January 23: The China reopening is likely to weigh high on the global equity markets even while the Indian indices suffer from the selloff by the foreign institutional investors who are rushing to buy into the Chinese equities. The US Fed positive commentary cheered the Dow Jones with over one per cent spurt, as signs emerge of the inflation peaking in the developed world.

The China reopening is leading to selloff in the in the Indian equity market, and traders are seen to have become cautious with a few sectors which may be at a disadvantage, including the pharma sector. Nifty Pharma for instance has been a laggard in the recent days. The index has contributed negatively to the overall market sentiment. The likes of Divi’s Laboratory are dragging the pharma pack in the Indian equity markets.

Chemical sector is also being cautiously watched by the market participants. The China reopening is being seen negative on the chemical sector. This is also corroborated from the lackluster performance of the chemical sector companies in the recent days. Dipak Nitrite, which is one of the leaders of the chemical sector, is seen to be most bearish. Atul Limited, which is another market leader of the chemical sector, has emerged to be a bearish stock, with the scrip sliding down in the stock market. Similar is the story with several of the chemical stocks, which have export portfolio.

Market participants are also betting that the textile sector may be adversely affected by the China reopening theme, as the benefits that came to India in the last one year when the ‘Zero Covid Policy’ sent the international contract manufactures to the India market may turn bearish. This again is corroborated from the price performance of the textile companies on the bourses who are seen to be bearish if they don’t have extra businesses as is the case with Jindal Worldwide (electric vehicle).

While pharma, textile, chemical are seen to be under stress on the indices, the market participants are betting on easing of the supply side stress in the global market, which may bring relief to inflation, and thus could be the good news for the equity market unless there is new development which may negate the emerging supporting trends.

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