Stock Market: Indices slide on inflation spike; Adani fear spread boosts bears

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By S Jha

New Delhi, February 13: Bears gained strength on the Dalal Street on Monday. The Adani Group of Companies continued to be hammered amid unabated negative news flow. The Adani fear spread is now seen pushing the banking stocks down.

Sensex and Nifty lost 250 and 85 points respectively. The distress in the Bank Nifty was more visible. The unabated hammering of the State Bank of India in particular is keeping the investors worried. The SBI has been overly sold, with scrips now touching the level of Rs 537. The Adani Group of companies were in the lower circuits, and the two flagship firms, which are part of the future and option (FnO) were down heavily.

The bear play on the Dalal Street was aided by the rout in the IT stocks. Infosys, which had broken out of a trading range previously, was down by over two per cent. Its peers such as TCS, Tech Mahindra and others were equally beaten on Monday. The IT rally had come on the back of the strong gains on Nasdaq a few sessions ago. However, the US equity market saw worst losses last week on account of the commentary of the Federal Reserve, which spoke of a long journey to tame inflation.

The retail inflation came in India in off-trading hour, and caught the observers by surprise. The consumer price index (CPI) climbed to 6.58 per cent, breaking out of the RBI zone for the first time in two months. The number gave credence to the commentary after the monetary policy committee meeting, which had sounded hawkish. The US equity market was trending up in the early hour of trade on Monday after the investors sensed that the market is oversold. Both Dow Jones and Nasdaq were in the green territory.

For the second day in a row the foreign institutional investors (FIIs) pumped in Rs 1000 crore plus in the cash market. The FIIs reported a net cash buy of Rs 1322 crores. Their domestic counterparts also ended the day with a net cash buy of Rs 522 crores. The FIIs appear to be indulging in value buying after a long spree of shorting the Indian equities. The DIIs have consistently been buying into the market. The traders are keeping their fingers crossed, and waiting for strong hands to lift the market from the grips of the bears.