Indian equities extended the losing run of the previous four sessions to February 22 as the market benchmark Sensex fell more than 1,000 points and Nifty below 14700 in intraday trade.
At 1405 hours, Sensex was 947 points, or 1.86 percent, down at 49,943 while Nifty was 262 points, or 1.75 percent lower at 14,719. Mid and small-caps were outperforming as the BSE Midcap and Smallcap indices were down Nifty below 14700 1.34 percent and 0.95 percent, respectively.
Here’s are 5 factors that fuelled selling in the market:
Concerns over rising Covid cases:
The concerns over rising COVID-19 cases in India is dampening market sentiment. Maharashtra has announced a fresh set of restrictions in the state in the light of a rise in COVID- 19 cases in the last week. In the last four weeks, the weekly tally of the state has shown a rising trend and increased from 18,200 to 21,300.
Concerns over rising inflation:
Analysts are of the view that rising US 10-year bond yield indicates the market’s worries about inflation. Besides, it is also making equity valuations appear stretched in comparison.
Siddhartha Khemka, Head – Retail Research, Motilal Oswal Financial Services, pointed out Nifty valuations at nearly 21 times FY22 EPS are not inexpensive anymore and demand consistent earnings delivery ahead.
Fall in the pace of FPI inflow:
Concerns over rising coronavirus cases and high valuations seem to have weighed on FPI inflow also, experts pointed out. Even though FPIs have been buying in the Indian market, the pace of inflow has slowed. FPIs net bought shares worth Rs 118.75 crore in the Indian equity market on February 19, as per provisional data available on the NSE.
Lacklustre global cues:
Lacklustre global cues also weighed on investor sentiment back home. As per Reuters, Asian shares turned mixed on Monday as expectations for faster economic growth and inflation globally battered bonds and boosted commodities, while rising real yields made equity valuations look more stretched in comparison.
Last week, Nifty formed a bearish engulfing candle on the weekly scale. “Till it remains below 15,150, weakness could continue towards the next key support of 14,800-14,700 while on the upside, hurdles are seen at 15,250-15,400,”.