stock markets Archives - Lokmarg

Jitendra Luthra, an investment advisor based in UP, says the Indian fundamentals are strong enough to absorb any untoward disruptive incident in the long run. His views:

I have a piece of advice for all stock market investors, big or small, who have been losing sleep ever since US President Donald Trump announced a new tariff regime: Trump himself is still not clear about the intensity and degree of the tariffs he wants to impose on a specific country. White House is still rejigging the figures. So allow the dust to settle down and do not press the panic button.

My second advice is: the recent military flare-up between India and Pakistan will have little impact on the Indian market, though there could be minor upheaval initially. It is the Pakistan Stock Exchange (PSX) which will find it difficult to recover from the shock caused by the conflict as well as its after-effects. Stock markets move not only based on sentiments but also on the fundamentals of its corresponding economy.

Coming back to US tariffs, it is becoming increasingly clear that the real cause of the stocks tanking was US posturing against China. Currently, the two economic giants have reached a trade deal. Those who resorted to panic selling when the tariffs and counter-tariffs were hovering around 250% may now be regretting their decision.

Mind you, even while stock exchanges around the world felt the heat of reciprocal tariffs as soon as they were announced, the Indian stock market was arguably the first exchange to recover and successfully erase a majority of its losses. This is also seconded by the observations of big wig market experts like Bloomberg which touted Indian markets as “relatively safe” amid global volatility over Trump’s punitive move on friends and foes alike.

ALSO READ: Donald Trump And The New World Order

Reports have also lauded our markets for having a much better capacity to withstand a potential global recession at any point of time and any kind of unfavourable global economic conditions. According to other stats available widely, India is far better insulated from tariffs, accounting for only 2.7% of total US imports, compared to China at 14% and Mexico at 15% making less or no impact on its market behaviour for long durations of instability.

The recovery of Indian stocks after the ceasefire was announced is also a clear indicator that our fundamentals are strong. On the other hand, Pakistan stocks tanked since global investors know where it stands vis-à-vis India – be it economy, infrastructure, resources, planning, skills, etc. Therefore our investors need not worry in terms of returns during or post escalation.

Another stronghold of the Indian markets is that we have, for a significant period, managed to limit Chinese investments resulting in any kind of substantial effects on China having minimal or least impact on India unlike the situations and threats faced by other global markets. Also, our manufacturing capacities and capabilities are growing rapidly for the past few years positioning India as an alternate to China as a manufacturing hub. This, along with our more conciliatory approach with Washington, is also keeping our markets and investments stable and safe.

Initially, 26 per cent duty was proposed by Trump and our institutions are negotiating the present rejig with America, aiming for $500 billion in bilateral trade by 2030. We, as investors, should also not be moved with such ups and downs and pros and cons in the local and global markets as they are not permanent. We should also remember that our economy is one of the most stable economies in the world having surpassed major slumps and recessions in the past only to emerge more successful and powerful.

As told to Rajat Rai

Indian stock markets started the fresh week on a subdued note and lost nearly half a percentage point.

Sensex closed at 60,506.90 points, down 334.98 points or 0.55 per cent, whereas Nifty closed at 17,764.60 points, down 89.45 points or 0.50 per cent.
Among the Nifty 50 stocks, Divis Labs, JSW Steel, Hindalco, Tata Steel, and Infosys were the top five losers, while Adani Ports, IndusInd Bank, BPCL, Apollo Hospitals, and Hero Motocorp were the top five gainers, National Stock Exchange data showed.

“The recent price action on the benchmark front indicates uncertainty among the participants and that might continue in the near term. Traders should thus maintain their focus more on identifying opportunities in the sectors that are showing resilience. However, it’s easier said than done as we’re seeing restricted participation. Also, managing overnight risk is equally important citing the prevailing volatile scenario,” said Ajit Mishra, VP – of Technical Research, at Religare Broking.

The Adani Group companies’ shares, which are in news for over a week now, continue to decline on Monday, though with varying degrees.

Adani Enterprises declined 2.0 per cent, Adani Transmission 10.0 per cent, Adani Green Energy 5.0, Adani Wilmar 5 per cent, Adani Power 5 per cent, Adani Total Gas per cent. The only Adani Group company — Adani Ports — closed the day 8.6 per cent higher.

“After the Adani crisis broke out, the market has been on a twin track – crash in Adani stocks and stability in the rest of the market. The banking segment, which also came under pressure on fears of the crisis impacting banks, has recovered,” said V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services.

“The crisis is unlikely to pose any systemic risk to the Indian banking system. It appears that the Adani crisis’ impact on the market is slowly dying down. Excellent results from ITC and SBI are likely to support the market,” Vijayakumar added.

The January 24 report by a US-based short seller Hindenburg Research claimed the Adani Group of having weak business fundamentals and .accused it of stock manipulation and accounting fraud. In a long response, Adani Group had said the report by Hindenburg Research was not an attack on any specific company but a “calculated attack” on India, its growth story, and ambitions. It added the report was “nothing but a lie”.

Going ahead, much will also depend on the RBI’s monetary policy decisions and outlook.

The three-day Reserve Bank of India monetary policy committee meeting commenced on Monday with the outcome of the deliberations set to be announced on February 8.

“We believe that RBI will go slow with the rate hikes now since inflation is at 5.72 per cent below the upper tolerance limit of 6 per cent. The US Fed has also slowed its pace of interest rate hikes with a 25 bps hike recently. With a benign outlook on global inflation, central banks across the world have now reduced their pace of rate hikes,” said Apurva Sheth, Head of Market Perspectives and Research, Samco Securities.

“We believe that RBI will hike rates by another 25 bps in February meeting. This will push the rates to a seven-year high of 6.5 per cent. RBI will go with a wait-and-watch approach after this meeting and slowly shift focus on growth,” Sheth added.

In its December monetary policy committee meeting, the RBI raised the policy repo rate, the rate at which the RBI lends money to all commercial banks, by 35 basis points (bps) to 6.25 per cent.

RBI has hiked the key policy rate by 225 basis points since May 2022 to 6.25 per cent to cool off domestic retail inflation that stayed above its upper tolerance limit for nearly three quarters. Raising interest rates typically cools demand in the economy, thereby putting a brake on inflation.

SBI Research, in a report published before the RBI meeting started today, expects.believes India’s central bank will pause the policy rate hike during he February 6-8 review meeting. (ANI)

Tag: stock markets

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