Market Bloodbath: Recession Jitters & Geopolitical Tensions Tank Indices, MFs Face Stress Test | Weekly Update March 16th
Hello Readers!
Buckle up for a wild ride! This week saw a blood bath in stock markets, with small and mid-cap stocks witnessing a major beating. The indices swung between gains and losses, leaving investors a little bewildered. Intrigued by the market’s twists and turns? We’ll delve deeper into the week’s key events and what might have caused this market mayhem. But first, let’s get you up to speed with some quick market highlights!
🧾In this Article
Weekly Market Wrap-up
Quick bites
Stocks in News
Sustainability Corner
IPO corner
Cover story: Market Bloodbath: Recession Jitters & Geopolitical Tensions Tank Indices, MFs Face Stress Test
Key events
📈 Weekly Update
This week, Dalal Street witnessed a period of correction, with both the Sensex and Nifty experiencing significant declines. The Sensex closed 1.99% lower at 72,643.43, shedding a total of 1475.96 points. The Nifty followed suit, falling 2.09% to settle at 22,023.35, a loss of 470.2 points. While the overall sentiment leaned bearish, there were a few bright spots and interesting trends to unpack.
Winners and Losers:
Even amidst the correction, some stocks managed to defy the downtrend and emerge as winners. The IT giant, TCS (₹4238.8) gained 2.61% this week, reflecting continued investor confidence in the technology sector. Similarly, the FMCG giant, Nestle India (₹2,630), lived up to its reputation for resilience during market volatility, closing at ₹2,630 with a gain of 1.87%. The telecom sector also surprised with Bharti Airtel (₹1,222.7) gaining 1.77%. The life insurance sector found some support with HDFC Life Insurance (₹634.6) closing up by 1.68%. Finally, ITC (₹428.5), a consumer staple stock, also managed to gain some ground, reflecting a rise of 1.5%.
Several sectors bore the brunt of the correction, with some stocks witnessing significant declines. The power sector giant, NTPC (₹326), fell the most this week, dropping a steep 10.21%. This raises concerns about the power sector’s performance. The metals sector faced significant headwinds with Tata Steel (₹143.65) closing down a worrying 9.98%. Coal India (₹427.85), another major player in the energy sector, witnessed a decline of 9.5%. Power Grid Corporation (₹271.9), a key player in the power transmission sector, also fell by 9.23%. Finally, the auto sector felt the pressure with Tata Motors (₹980) closing down by 8.96%.
Sector Spotlight:
Several sectors bore the brunt of the correction. Capital Goods (BSE CG) witnessed the steepest decline, plummeting 4.45% to settle at 56,820.05. Consumer Durables (BSE CD) and Healthcare (BSE HC) also faced significant losses, falling 4.01% and 2.82% respectively, closing at 50,559.14 and 33,910.35.
Market Movers and Shakers
- Here’s a quick look at some news items that may have influenced market movements:
- Nifty, Sensex Fall As RIL, Infosys, L&T Drag as Fed Rate Cut Hopes Wane: Reliance Industries (RIL) and Infosys, heavyweights of the Indian market, witnessed significant declines, contributing to the overall market dip. This could be attributed to waning hopes of a potential interest rate cut by the US Federal Reserve.
- Sikka Ports Buys 3 Crore Shares of Jio Financial From RIL: This strategic acquisition by a major player could be a sign of confidence in the digital financial services sector.
- GMR Airports February Traffic Data: Investors might be closely analyzing traffic data at airports to gauge the recovery of the aviation sector.
Market Breadth:
Market breadth, indicating the overall participation of stocks, leaned towards sellers. Around 2,010 stocks declined, while 1,811 stocks rose on the BSE. This suggests a broader market correction rather than isolated incidents.
FPI Trend:
Domestic Institutional Investors (DIIs) displayed a volatile trend in their cash market activity over the past week, ending March 15th, 2024. While they emerged as net buyers on March 15th, injecting ₹848.56 crore into the market, the earlier part of the week saw significant net selling. DIIs were net sellers on March 14th (-₹1,356.29 crore) and 13th (-₹4,595.06 crore), indicating a cautious stance amidst ongoing market volatility. The earlier part of the month witnessed a mixed bag, with net buying on March 11th (₹4,212.76 crore) and a small net inflow on March 12th (₹73.12 crore). This data highlights the indecisiveness of DIIs in the face of recent market uncertainties.
Rupee Report:
Despite earlier stability, the Indian Rupee (INR) closed marginally weaker against the US Dollar (USD) this week. It ended the week at ₹82.89 to the dollar, a depreciation of 6 paise compared to the previous close of ₹82.83. While a slight weakening, this still offers some comfort in terms of import costs.
Gold Surges:
Buoyed by its traditional safe-haven status, gold prices climbed globally this past week as geopolitical tensions continued to simmer. This surge reflects investors seeking stability amidst market volatility. On the international market, gold prices rose by roughly 2-3%, translating to an increase of around $50-$75 per ounce. This uptick was mirrored in India, with major cities witnessing a rise in the price of 22-carat gold by approximately ₹300-₹400 per 10 grams over the week. This highlights gold’s enduring appeal as a reliable store of value during times of uncertainty.
Global Gossip:
Markets worldwide mirrored the negativity in India. Major indices in the US, like the Dow Jones Industrial Average and the Nasdaq Composite, witnessed significant declines, falling below 38,000 and 15,500 respectively. Concerns about a potential global recession and ongoing geopolitical issues impacted investor confidence across the globe. Asian markets also felt the pressure, with key indices like the Shanghai Composite experiencing losses of over 2%.
Bottom Line
Indian markets maintained their positive momentum this week, extending their winning streak. While concerns remain regarding global economic conditions and potential interest rate hikes, positive developments like the strengthening rupee and strong performance in certain sectors offer some optimism for the upcoming week.
It will be an action-packed week for the IPO market, with 7 new issues that will hit Dalal Street next week and 8 new stock listings.
Going ahead, US Presidential elections can sway the American markets, and one should keep a watch there. It’s important for investors to stay informed about both domestic and global market trends to make informed investment decisions.
🍟 Quick Bites
- 🚀 India successfully test-fired its Agni-5 missile equipped with the country’s first domestically developed MIRV system, allowing a single missile to carry multiple warheads to different targets.
- 🚆 Ten new Vande Bharat trains will hit the tracks tomorrow, connecting cities like Lucknow to Dehradun and Puri to Visakhapatnam.
- 🤝 India inked a free trade deal with EFTA nations (Switzerland, Norway, Liechtenstein, and Iceland), potentially attracting ₹7 lakh crore in investments over the next 15 years.
- 💼 The National Stock Exchange (NSE) announced a 1% reduction in transaction charges for cash equity and equity derivatives, effective April 1st, 2024.
- 📉 India’s retail inflation dipped slightly, falling from 5.10% in January to 5.09% in February.
- 🛡️ A new report by SIPRI reveals India as the world’s top arms importer between 2019 and 2023, with Russia being its primary supplier.
- ✈️ Fly91 airline takes flight on March 18th, with its inaugural services connecting passengers to Hyderabad and Bengaluru.
- 📊 A report by Janus reveals that global corporate dividends reached an all-time high of ₹116.2 lakh crore in 2023, with Microsoft, Apple, and Exxon Mobil leading the pack.
- 🛑 ICICI Prudential Mutual Fund is putting a temporary hold on lump sum investments in their Small Cap Fund and Midcap Fund.
- 🔌 The government launched a new scheme called “E-Mobility Promotion Scheme 2024” with a budget of ₹500 crore over four months (starting April 2024) to promote electric two-wheelers and three-wheelers.
- 💰 The Indian government granted the Reserve Bank of India (RBI) permission to import gold without import duties.
- 🤝 India and Bhutan strengthened their ties by signing agreements to boost bilateral trade and ensure a long-term supply of petroleum products to Bhutan.
- 🚇 Two new Delhi Metro corridors, with a combined length of approximately 20 kilometers, have been approved for construction.
- 🛣️ The Ministry of Road and Transport has sanctioned road projects in Rajasthan, Karnataka, and Telangana worth ₹3,208.4 crore.
📰 Stocks in News
- 💼 Aditya Birla Capital to Merge with Aditya Birla Finance.
- ✈️ IndiGo Airlines Announces New Direct Flights Between Chandigarh and Dharamshala.
- 🏍️ TVS Motor Approves Interim Dividend of ₹8 per Share.
- 💊 Mankind Pharma to Distribute AstraZeneca’s Symbicort Asthma Drug in India.
- 🔌 Power Grid Planning Joint Venture with Rajasthan Nigam for ₹10,000 Crore Transmission Projects.
- 📉 SEBI Orders Vedanta to Pay ₹77.6 Crore to Cairn UK Holdings for Dividend Delay.
- 💰 Power Finance Declares ₹3 Per Share Dividend.
- ✈️ IndiGo Co-Founder Rakesh Gangwal Sells Shares Worth ₹6,785 Crore.
- 🚬 British American Tobacco to Sell 3.5% Stake in ITC Through Block Deal.
- 💸 IIFL Finance to Raise Up to $241.5 Million Through Shares and Debentures.
- 🏦 Kotak Mahindra Bank Sells 2% Stake in KFin Tech for ₹208 Crore.
- 🛣️ NHAI Advises Paytm FASTag Users to Switch to Different Banks by March 15th.
- 🏦 RBI Directs Federal Bank to Stop Issuing Co-Branded Credit Cards.
- 💊 Dr Reddy’s Receives Tax Demand of Around ₹74.22 Crore.
- 🚗 Tata Motors to Invest ₹9,000 Crore in New Vehicle Manufacturing Facility in Tamil Nadu.
- 🛫 SpiceJet has finalized a lease agreement for 10 aircraft.
- 💳 Paytm has been granted a third-party application provider license by NPCI.
- 🛡️ Bharat Electronics received an order worth ₹847.7 crore from L&T for the supply of warfare sensors and systems.
- 🚧 RVNL’s joint venture with Salasar Techno has been awarded a transmission project worth around ₹174 crore in Madhya Pradesh.
- 💼 DB Realty raised ₹920 crore by selling shares to institutional investors.
- 🏙️ DLF sold 4.67 acres of land in Chennai to Cholamandalam Investment for ₹735 crore.
🌱 Sustainability Corner
- ☀️ Torrent Power Wins 306 MW Solar Project in Maharashtra for ₹1,540 Crore.
- 🔋 India has approved a new EV policy aimed at attracting companies like Tesla. Under this policy, global OEMs establishing EV plants in the country will be permitted limited imports of cars at reduced duty rates.
- 🚗 Government introduces ‘Electric Mobility Promotion Scheme 2024’ with a budget of ₹500 crores for 4 months to subsidize e2Ws & e3Ws, excluding buses and 4-wheelers, as FAME II subsidy for EVs concludes on March 31.
- 🚙 Subaru Corporation and Aisin Corporation collaborate to develop eAxles for Subaru’s battery electric vehicles from the latter half of the 2020s.
- 🏍️ TVS Motor Co trademarks XL EV & E-XL names as its petrol-engined XL 100 moped sees continued demand, with 440,936 units sold in the past 11 months.
- 🚛 Government approves E-Vehicle policy to attract EV manufacturing investment in India, offering lower customs duty of 15% and no minimum investment cap.
- 🛴 Bengaluru court halts Kinetic Green’s Zulu electric scooter sale due to trademark dispute with Yulu.
- 🚌 Solaris maintains its top position in Europe’s zero-emission bus market, selling 1,456 buses in 2023, with battery vehicles, hydrogen vehicles, trolleybuses & hybrids accounting for over 80% of sales.
- 🛵 Greaves Electric Mobility launches Eltra City with a 160km range on a single charge, targeting the growing demand in the e-3-wheeler market.
- 🔌 FY24 witnesses electric three-wheeler sales exceeding 600,000 units, with Mahindra capturing a 9% market share by selling over 53,000 EVs, alongside Bajaj Auto’s sale of 7,500 units since June.
- ☀️ SJVN Green Energy Receives Letter of Intent for 500 MW Solar Project.
🚀 IPO Corner
- Gopal Snacks witnessed a subscription rate of 9.02 times, with retail subscription at 4.01 times.
- Popular Vehicles & Services had a subscription rate of 1.23 times, while retail subscription stood at 1.05 times.
Market Bloodbath: Recession Jitters & Geopolitical Tensions Tank Indices, MFs Face Stress Test
Buckle up, investors, because this past week on Dalal Street felt more like a haunted house than a trading floor! The markets took a nosedive, leaving even seasoned traders feeling a little jittery. It was all tricks and no treats, with both the Sensex and Nifty tumbling by over 1.2%. That’s a drop of roughly 780 points for the Sensex, which closed at around 73,200, and 240 points for the Nifty, settling near 22,200. Talk about a Halloween hangover that lasted all week!
A Cocktail of Global and Domestic Worries
A perfect storm of spooky news brewed up. First, there were global worries about a possible recession. Remember that creepy feeling you get when the wind howls outside your window in a horror movie, hinting at a coming storm? Yeah, that’s the kind of vibe global economic data, with reports of slowing growth and rising inflation, was giving off. Then, there was the ongoing geopolitical situation, adding another layer of uncertainty to the mix. Imagine a spooky fog rolling in, obscuring the path ahead – that’s what geopolitical tensions felt like for the markets.
Disappointing Results from Key Players
Closer to home, disappointing corporate results from some big players further spooked investors. Imagine encountering a bunch of creepy clowns when you least expect it – that’s how these unexpected results impacted investor sentiment. Banking giants like HDFC Bank and ICICI Bank witnessed declines exceeding 2%, while IT stalwarts like Infosys and TCS tumbled by more than 3%. Additionally, foreign investors spooked by the market tremors decided to withdraw their funds, pulling out a net of approximately ₹2,500 crore from the Indian markets. Just like someone fleeing a haunted mansion, they sought refuge in what they perceived as safer grounds.
Who Felt the Heat?
Banks and IT stocks, those usual market darlings, took a nasty tumble. Imagine your favorite superhero suddenly turning into a villain – that’s how some of these stocks felt this week. The only silver lining came from the ever-reliable FMCG and Pharma sectors, which held their ground much like a brave protagonist in a horror flick. They weren’t exactly slaying dragons, but they did offer some much-needed stability. For instance, Sun Pharma and Dr. Reddy’s Laboratories managed to gain over 3% on the back of strong quarterly results.
Stress Test for Mutual Funds (MFs)
Mutual Funds (MFs) also had their own spooky encounter this week! To gauge their preparedness for a potential investor stampede, SEBI (the market regulator) put them through a stress test. This test basically simulates a scenario where a large number of investors, say 20% or more, try to withdraw their money all at once. Imagine a horde of zombies rushing towards you, demanding their brains… well, their money in this case.
The stress test results, while still being finalized, highlighted the challenges MFs might face in quickly selling their holdings, particularly in small and mid-cap stocks, which are generally less liquid (think of them as the dusty, cobweb-filled corners of the market with fewer buyers and sellers). This is something to consider when choosing your MFs, especially if you’re invested heavily in smaller companies.
So, what does this spooky market week mean for investors?
Here’s the deal: the experts are predicting some choppy waters ahead, with a high chance of the markets continuing their downward trend throughout the year. Don’t panic! Remember, even in a scary movie, the hero usually survives. The key is to be cautious and have a well-thought-out plan.
Here’s a survival guide for you as an investor:
Cash is King: Keep a good 30% of your portfolio in cash, especially if you’re heavily invested in small and mid-cap stocks. Think of it as a magic shield that can protect you from some of the market’s spooky surprises.
Focus on Large Caps: While even large-cap stocks might take a hit, they’re generally considered safer bets during turbulent times. Think of them as the sturdy, well-lit areas in a haunted house – not exactly exciting, but less likely to give you nightmares.
Wait and Watch: Don’t get spooked into making rash decisions. Observe the market carefully before making any big moves. It’s like waiting for the fog to clear before venturing out into the unknown.
Remember, even the scariest movies have a happy ending (or at least a hopeful one). The Indian market has weathered many storms before, and it will weather this one too. By staying informed, making smart decisions, and keeping a cool head, you can emerge from this spooky market phase stronger and wiser. Now, go forth and conquer, brave investor!
Upcoming key financial events for the week:
| Date | Event |
| 15-Mar-24 | – USD Empire State Manufacturing Index |
| – USD Prelim UoM Consumer Sentiment | |
| 20-Mar-24 | – GBP CPI y/y |
| – USD Federal Funds Rate |
| – USD FOMC Statement | |
| 21-Mar-24 | – USD FOMC Press Conference |
| – GBP Monetary Policy Summary | |
| – EUR French Flash Manufacturing / Services PMI | |
| – EUR German Flash Manufacturing / Services PMI | |
| – GBP Flash Manufacturing / Services PMI | |
| – USD Flash Manufacturing / Services PMI | |
| – USD Unemployment Claims |
