Stock market today: After posting two-day gains, markets bled on Wednesday as investors worried about rising inflation and aggressive central bank policy tightening. India’s benchmark 10-year yield fell slightly to 7.41% from its previous close of 7.48%. Asian stocks fell in volatile trade, failing to extend an overnight rally on Wall Street, while the Japanese yen hit a new 24-year low against the dollar. The BSE Sensex lost 700 points while the NSE Nifty slipped below 15,400 as BSE’s market capitalization fell from Rs 3.36 lakh crore to Rs 237.27 lakh crore from Rs 240.63 lakh crore it a day ago.
Dr. VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services, said: “Drawdown rallies can be sharp and they were yesterday. The important question is: will this continue? There is no economic news, except for crude weakness, to support the rally. There is no reason for FIIs to change their selling strategy as the dollar continues to be strong and US bond yields are attractive and set to rise further. The large caps that rebounded strongly yesterday are fundamentally strong stocks. Therefore, the best investment strategy should now be to buy these high-quality names in small, dip quantities.
Here are the main reasons for the market drop today:
Testimony of Jérôme Powell
U.S. Federal Reserve Chairman Jerome Powell is due to begin testimony to Congress later today as investors seek further clues as to whether another 75 basis point rate hike is on the cards at the congress meeting. Fed July. Fears that the Fed could continue to raise rates aggressively despite looming fears of a recession in the world’s largest economy are weighing on investor sentiment. As such, there was some caution among market participants ahead of Powell’s testimony.
Weakness in US futures
US futures fell as much as 2%, indicating early spread for the Dow Jones, S&P 500 and Nasdaq later tonight. While markets such as Japan, China and Australia fell slightly by 0.3%, those of Hong Kong, Taiwan and Korea fell by 2%.
Rupee hits new high at 78.29
The Indian rupee hit a new record high of 78.29 against the US dollar on Wednesday as continued outflows of foreign funds from financial markets, risk aversion in global equities and high crude prices put pressure on the market. local currency. The fall comes amid selling off in emerging market stocks and currencies ahead of US Fed Chairman Jerome Powell’s testimony to the US Congress later in the day. Foreign exchange analysts said the local unit was also hampered by heightened concerns over India’s inflation and current account deficit and high crude oil prices.
The persistent weakness of the rupee intensifies foreign outflows. The data showed outflows of foreign stocks topped Rs 40,000 crore in June so far, or Rs 2,07,195 year-to-date.
Clever technical insights
“Even though US markets ended firm in overnight trades, weakness in most Asian indices could weigh on domestic benchmarks in early trades. On the other hand, Nifty’s technical charts suggest a “Bullish Morning Star Candlestick Pattern” Nifty decisive support for the day is seen at 15,453, then good support at the recent low of 15,181.
“We suspect that Bank Nifty is also targeting a significant rebound with the biggest support seen at 32,155 points. The upside, however, could be capped on reports of fears the global economy could slow significantly amid aggressive tightening by major central banks around the world to rein in record inflation that has rattled sentiment. he added.
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