oppn parties Markets In Correction Mode

News Snippets

  • PM Modi says anti-India forces are against him but he will not bend
  • Campaigning ends for the 6th and penultimate phase of polling for the 2024 general elections. Voting on Saturday, May 25
  • Arvind Kejriwal waits at home but Delhi cops did not turn up to question him and his family in the Swati Maliwal case
  • Delhi HC denies bail to Manish Sisodia, says non-recovery of cash not a proof that there was no corruption
  • H D Deve Gowda asks his grandson Prajwal Revanna, accused in rape and sexual molestation cases, to return to India or face his anger
  • Kolkata cops search for Bangladeshi MP Anwarul Azim Anar's chopped body parts in Bangar, near Kolkata. The MP was murdered in an apartment complex in New Town, Kolkata by opponents from bangladesh who hired a contract killer for the job
  • Clashes break out in Bengal's Nandigram as a BJP worker's mother is killed by miscreants
  • Google in talks with Foxconn to make Pixel phones and drones from plant near Chennai
  • Survey by S&P Global shows that business activity was robust in May and job creation was highest in 18 years
  • Indigo reports Rs 1895cr profit in Q4 last fiscal, and nearly $ 1bn in FY23-24, a record for Indian carriers. Proposes business class in busiest and busy routes
  • Stocks on fire on Thursday after initial uncertainty: Sensex gains 1196 points to 75418 and Nifty 369 points to 22967
  • Ricky Ponting turns down offer to coach Team India, says will not fit in his lifestyle
  • World Cup stage II archery: Pramatesh Fuge enter semifinals but men's and women's recurve teams lose their matches in the first round
  • Malaysian Open badminton: P V Sindhu enters third round after a scare and Ashmta Chaliha stuns third seed Beiwen Zhang of USA to enter third round too
  • Sharjah Challenge chess: Divya deshmukh wins title
Record RBI dividend to government spurs a rally in stock markets, Sensex and Nifty touch all-time highs intra-day on Thursday
oppn parties
Markets In Correction Mode

By Sunil Garodia
First publised on 2024-05-10 03:16:15

About the Author

Sunil Garodia Editor-in-Chief of indiacommentary.com. Current Affairs analyst and political commentator.

After volatility and general weakness in the last few trading sessions, the stock markets crashed hugely on Thursday. The Sensex lost 1062 points or 1.45% and the Nifty was down by 345 points or 1.55%. Investor wealth worth Rs 760000cr was wiped out. A sense of uncertainty prevailed in the broader market and except for auto and ancillaries; all sectors were in the red. The BSE market capitalization went below Rs 40000000cr.

So why are the markets spooked?

There are several factors that have pulled the indices down in the last few trading sessions after the new highs achieved before that. There is rising uncertainty over the election results, with voter apathy and extreme conditions resulting in lower voter turnout. Although the market is not worried about the third term for Prime Minister Modi, it feels that the results will see the BJP/NDA getting a lower number of seats than in 2019. Hence the bulls are retreating and the bears seem to be tightening their grip.

The other big factor is high valuations. Most observers, especially the FPIs, feel that prices are overvalued. At these prices, there always will be selling pressure as many investors would like to book profits. FPIs have become net sellers for the last few sessions, giving a chance to the bears. Other Asian markets have performed better in the last one month as the PE ration is lower. FPIs feel Indian shares are grossly overvalued. Then RPG group chairman Harsh Goenka also warned investors about a 'Harshad Mehta-type' scam brewing. That has also scared some retail investors.

Further, there is concern over rising inflation in the US as that will mean that the Fed will not cut rates. The prolonged heat wave in many parts of India has increased the prices of essentials, especially fruits and vegetables and there are fears that it will lead to higher inflation which will not be easily tamed.

Apart from this, the geopolitical concerns and Q4 earnings, which were in line and not spectacular, have also weighed in to tame the euphoria. Markets are in correction mode and it is difficult to see this trend changing before the election results are announced. Trading sessions henceforth are likely to be volatile and the sentiment is likely to remain negative.