Stock Market: Rate hike fear returns; street turns into graveyard for bulls
By S Jha
New Delhi, March 2: Consensus views among market participants on a bear market is that it has a pattern of deep dives followed by sideways and occasional surge. Bears mint money, bulls get butchered, and option sellers pocket all the money of the option buyers. That has to be the description of a bear market, with marked feature of making the bulls guessing of turnaround where they get trapped.
The global fear of a sustained rate hike trajectory returned in Europe and the US. The Chinese equity market also dipped. The inflation numbers have no reasons in the near horizon to be tamed by the actions of the Central banks. The developed world had minted money leisurely to beat the blues of the coronavirus. The system has too much of excess money that still needs to be sucked in by the rate hikes of the Central banks world over.
In addition, the US and China are sparring at every forum. Russian President Vladimir Putin’s suspension of the participation of Russia with the US in START is being read in the western countries with trepidation, as the NATO forces continue to turn heat on the Russian forces. China may supply arms to Russia and that could potentially set up the worse scenario for the global equity markets.
Thus, Sensex dived by 500 points. The Nifty also sank in with over 135 points. The street lost whatever it had gained in the previous session. The foreign institutional investors are dumping the Indian equities. In a span of four trading session, the FIIs have sold a net of Rs 10,500 crores. However, the pre-market actions showed a number of block deals in the Adani group of companies, as lots were bought by the US-based fund houses in the beleaguered companies. Goldman Sachs was among the US-based fund houses who bought into the likes of Adani Green and others on Thursday.
The block deals in the Adani companies were to the tune of over Rs 15500 crores. That means the FIIs had a net sell of over Rs 2700 crores in the cash markets for non-Adani equities. This shows the intensity of the FIIs dumping the Indian equities. On the back of block deals, the Adani companies remained firm in the market.
The rate hike fear sank the IT stocks, with several of the frontline scrips ending in deep reds. The auto stocks, including Maruti and Mahindra and Mahindra also cracked in the market on Thursday.
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