Stock Market: US Fed on back foot, bulls sense comeback
By S Jha
New Delhi, March 21: “Novices open the markets and experts close the session” has been an age-old saying in the equity market, which mirrored in the cation of the Dalal Street on Monday. The day began under the heavy shadow of the sinking of the Credit Suisse Bank and the US Federal Reserve meeting this week to take a call on further rate hike.
Panic-stricken investors dumped their stakes as the indices kept sinking as the day progressed. Nifty gradually sloped down to a cut of over 260 points to touch the level of 16850 from where the index took support to stage a recovery after hints came from the US Futures that all may not be lost. Bank Nifty had a roller coaster ride on Monday as the index at one point was down by over 600 points.
But the close of the trading session even after deep cuts of the indices showed the sense that the bulls had something to fight for in the market. Nifty staged a recovery of over 150 points in the last hour of the session. Bank Nifty recovered almost 400 points to close the day. The recovery was attested by the strong show of Dow Jones in the afternoon session, as the index was up by one per cent or over 300 points.
The investors in the US markets are now sure that the Fed would not take a 50 basis hike in the benchmark interest rate. They are betting on 25 basis point hike at the most and even a section of them believe that Jerome Powell will leave the headline rates untouched. The hope is pinned on the fact that the high interest rate regime has taken the US and European financial system to the brink of collapse and any further hike in the rate could prove to the be the proverbial last straw on camel’s back.
Bajaj Twins fell the most on Monday, contributing to the deep cuts of the indices. The metal sector remained under stress, as Hindalco fell by about three per cent. IT sector and other metal scrips were also under stress. The metal sector is also under stress on account of the China reopening theme, as the Indian steel majors will now have to face the challenge of the Chinese competitions. Even while the foreign institutional investors dumped equities more than Rs 2500 crores in the cash market, their domestic counterparts squared off them with a net positive institutional contributions of over Rs 300 crores.
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