market outlook: Market Watch: What is driving the bearishness on D-Street? | The Economic Times Podcast

-Growth will slow if RBI hikes rates, says Finance Secretary
-Labour force increased by 8.8 million in April
-No tax reassessment notice till FY15 says CBDT
-Rajiv Kumar appointed next Chief Election Commissioner
-UK economy shrank in March, grows 0.8%
– Bail pleas dismissed in NSE co-location case

Let’s take a quick glance at what happened on Dalal Street today.

Bears deepened their grip on domestic equity markets on Thursday, with headline stock indices marking their fifth consecutive day of losses.

A sharp 1,000-point selloff in the Sensex and across-the-board selling in second-run stocks eroded the investor wealth by Rs 5 lakh crore in Thursday’s trade, with their losses mounting to Rs 34 lakh crore since the high of Rs 275.17 lakh crore on April 11 high.

The key theme that drove the selling pressure was fear of significant interest rate hikes both home and abroad, with the latest US inflation data warranting a continuation of the Federal Reserve’s aggressive rate hike stance.

The data led to a plunge in the US and Asian stocks, which then spilled over into Indian markets.

With polls predicting a surge in domestic inflation to around 18-month highs in April, speculation is rife that the Reserve Bank of India, which announced a surprise rate hike last week, could step up its rate increases to tackle hardening consumer prices.

The prospect of tighter financial conditions coupled with a weakening growth outlook has soured the mood among equity investors, with foreign institutional investors continuing to exit Indian stocks at a ferocious pace.

The sharp depreciation in the rupee, this week – the domestic unit touched a fresh all-time low in Thursday’s trade – bruised sentiment further as investors feared even more FII outflows and increased pressure on India’s import bill.

Banking, financial services, metals and consumer durables witnessed the heaviest selling pressure, dragging the Nifty50 well below the 16,000 mark. The index settled 359 points lower at 15,808.

The BSE barometer Sensex crashed 1,158 points to close at 52,930.31. The two headline indices have lost around 4 per cent each since last week.

Broader markets fell in line with the headline indices, with the BSE Midcap and Smallcap indices shedding 2 per cent each. Fear gauge India VIX jumped 6.4 per cent to close at 24.27.

29 of the 30 stocks on the BSE Sensex fell, with IndusInd Bank plunging 6 per cent. Tata Steel, Bajaj Finance and Bajaj Finserv declined 4 per cent each, while Axis Bank slid 3 per cent. The HDFC twins, Titan and L&T, also gave up 3 per cent each.

Wipro was the only gainer of the day, rising 1 per cent.

107 stocks hit upper circuits while 497 hit lower circuit limits. 12 stocks tested their 52-week highs during the session, whereas 293 tested their 52-week lows.

We have Vinod Nair from Geojit Financial Services to share his views on the day’s action and the road ahead:

Welcome to the show, sir:
1. Markets plunged today, marking the fifth straight day of losses. What is driving the bearishness and when do you expect a bounce-back?
2. Midcap and smallcap indices have now entered a bear grip. How much more pain is in store for these segments?

We also caught up with Vaishali Parekh of Prabhudas Lilladher to decode the technical charts for you.

1. The Nifty50 plummeted, closing well below the 16,000 level. What do the technical charts suggest about it?
2. Bank Nifty suffered more than the headline index today. What is your outlook on the sector?

Asian markets ended with heavy losses. Major European markets too were trading with deep cuts in the first few hours of trade. Meanwhile, US stock futures were down, signalling a weak start to US equities later in the day.

That’s all for now. Do check out ETMarkets.com for all the news, market analysis, investment strategies and dozens of stock recommendations. Enjoy your evening. Bye Bye!