The Indian market appears more resilient compared to the meltdown in global equities past week as the losses suffered by benchmark Sensex was the least
The selloff that roiled the market across the globe saw equity indices in Asia, Europe and the US falling in the range of 5-9 per cent as investors got edgy over hardening bond yields.
Data shows the Asian markets were the worst hit, with Shanghai down 9.6 per cent, Hong Kong (9.5 per cent) and Japan (8.2 per cent). Dow Jones was down 5.4 per cent and European indices FTSE 100, DAX and CAC 40 were down 4-5 per cent.
Though Sensex saw a huge correction, it finally ended the week with a moderate loss of 2.9 per cent. Some buying support was also seen in smallcap and madcap stocks.
“The current earnings season is providing strong signs of revival in corporate earnings underlining the long-term growth prospects, which is providing relief for investors. However, the prevailing inflationary pressure and fiscal slippage may turn RBI to more hawkish stance in the near future,” said Vinod Nair, head of research at Geojit Financial Services.
How the US market recovers and bounces will be the key event to watch, said Jimeet Modi, founder and CEO, SAMCO Securities. "The shakedown in the Indian market reflects the market taking cognisance of the deterioration in India's macro- economic conditions over the past few months. "The steep increase in domestic and global bond yields may have stirred the market out of its complacency and into recognising that the deterioration may be here to stay for longer than earlier believed.
“We believe that the market is not fully pricing the risks of a prolonged macro weakness,” Kotak Securities said in a report
Analysts said the budget has dampened the investor sentiment in the near term. There was an increase in fiscal deficit due to a slowdown in GDP in FY18 led by demonetisation and GST. As a result deficit increased to 3.5 per cent from the earlier target of 3.2 per cent. But a more than anticipated slippage in FY19 to 3.3 per cent.
Taxing mutual funds may be a setback in the short-term given the growing inflow from common investors in SIP over the last 2-3years.