Stock Market: Fed fear pushes bourses off cliff
By S Jha
New Delhi, February 17: The US Federal Reserve members’ hawkish comments spoofed the American equity market in late hours of Thursday. The domino effect came to the Indian bourses, pushing the indices off the cliff. This came after Nifty after a long gap had reclaimed the 18000 level and Bank Nifty was a kiss away from the 42,000 level.
Nifty and Bank Nifty nosedived on Friday, lapped be gleeful bears waiting in packs to wrest control of the Dalal Street once more. The trading span is now too short. Wild swings are norms on the bourses. But the constant remains a long journey for the Central banks to suck the money from the market after the developed nations printed cash to escape the fury of the Covid-19 pandemic. The emerging markets such as India and Brazil are at risks of the developed nations drying the free float of the hot money, which will stay as a number one risk for the equity markets.
The Bank Nifty went hurtling down with all the constituents sinking. The likes of IndusInd Bank, ICICI bank, Axis Bank, Kotak Mahindra Bank, the SBI sunk to the lows amid the rise in the fear that the central bank will be more aggressive in hiking the rates. With the Bank Nifty going into a free fall, there was domino effect on Sensex and Nifty, as they too dived. The selloff was brutal in the banking stocks.
The bourses were also spoofed after the bond yields climbed sharply. The dollar index is also on fire. Rising dire is a net negative factor for the equity markets in India. Rise in the bond yield also is a net negative for the equities. The January trade data also confirmed that the global trade is shrinking, as India reported a 12-month low of the trade deficit on the bank of a sharp dip in both imports and exports. There should not be any doubts that the world economy is entering into a gloomy phase this year, and the traders are betting on time span required for the developed nations to come out of the recessionary phases.
Larsen and Toubro was the star of the day on the bourses. The index heavyweight is seen to have entered into a bullish phase after scaling the Rs 2200 level on the back of the company making its intents clear that it would seek to focus on high technology area and exit others. Dow Jones was trading almost flat in the afternoon session in the US.
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