Mumbai: Because of concerns about the increase in inflation aroused an increase in interest rates in several markets throughout the world, strong sales by investors in Dalal Street lowered Sensex with more than 2,000 points on Monday.
However, several purchases at a lower level in closing hours helped the index closed at 57,492, down 1,546 points on that day.
A rumor about the increase in the number of long-term capital of the tax rate in the budget, which was later rejected by the government, also added to the nervousness of investors, said market participants.
In the last five sessions, Sensex has lost nearly 4,000 points, from the highest recently at 61,309 on January 17.
One of the main reasons this slide is sales with foreign funds, said market participants.
If the interest rate in the world’s leading countries rises into inflation, it will make it get expensive money and therefore this fund manager takes a sum of money from the risky country market, including India, analysts said.
The latest data increases this logic.
Monday sales were led by foreign portfolio investors (FPI) with clean outflows at Rs 3,752 Crore, which took the net withdrawal of the month around Rs 15,000 Crore or $ 2 billion, BSE data and CDSL showed.
Institutional sales people, who interact with foreign and domestic fund managers every day on behalf of the broker, say that most of the current sales are with hedging and funds and ETF while long-term investors such as insurance companies and retirement funds are not bearish in India, and Therefore not sell aggressively.
Today’s sales make investors poorer with almost Rs 9 lakh crore with the capitalization of the BSE market now at Rs 264 Lakh Crore.
In the date, investors were worse by Rs 5.3 lakh Crore, official data showed.
Regardless of sharp selling, there are analysts that guarantee investors that sales are currently expected to ups and downs in the next two-three sessions.
According to Harendra Kumar, MD, Elara Securities India, in December Sensex had seen a low below 56K Mark and we had not reached there.
“However, investors are far nervous now mainly because there is a shift in investor preferences from stock growth to respect stock,” he said.
What this means is that investors globally, including in India, shifted from companies with a high-privile price ratio (P / E) for the amount of P / E which is quite low.
In India, shares such as Zomato and Paytm are growth stocks while companies such as Reliance Industries, Maruti, ICICI Bank, etc., are shares.
“There is a clear shift in investor preferences” from growth for the value of shares, he said.
“Going for a high P / E stock in the short term will be a little challenging.” Market players also said that compared to the US where technology stocks have a large weight in the index and hammered, in India, the company that has a similar technology has almost no weight in the leading index.
Therefore, investors may not panic and sell each stock generate profit, regardless of the industry they have.
On Monday night, the leading index in the US was hammered again with the Nasdaq composite index fell more than 3% in the middle of the session, while the Dow Jones Index fell 2% and S & P 500 2.6%.