{"id":2645,"date":"2022-01-25T13:00:00","date_gmt":"2022-01-25T12:00:00","guid":{"rendered":"https:\/\/ancstockinvestments.com\/blog\/?p=2645"},"modified":"2022-01-25T12:11:16","modified_gmt":"2022-01-25T11:11:16","slug":"has-the-bull-run-ended-for-the-indian-stock-market","status":"publish","type":"post","link":"https:\/\/ancstockinvestments.com\/blog\/2022\/01\/25\/has-the-bull-run-ended-for-the-indian-stock-market\/","title":{"rendered":"Has the Bull Run Ended for the Indian Stock Market?"},"content":{"rendered":"\n
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The year 2022 has begun badly for the Indian stock market.<\/p>\n

Over the past five trading sessions, key domestic indices Sensex and Nifty50 have both plunged by over 6% due to losses in financial and technology stocks. On Jan. 25, at the time of publishing this report, the Sensex was down 245.21 points, or 0.43%, at 57,246.30 points.<\/p>\n

\u201cThe trend in global stock markets has turned distinctly bearish. Last week, S&P 500 and Nasdaq closed 8% and 15% below their all-time highs,\u201d said VK Vijayakumar, chief investment strategist at brokerage firm Geojit Financial Services. \u201c\u2026the bulk of the selling is happening in non-profitable tech stocks. This trend is impacting stocks like Zomato and Paytm in India, too.\u201d<\/p>\n

Shares of technology startups like Paytm, PolicyBazaar, Nykaa, Zomato, and CarTrade Tech, which hit the bourses last year, are now trading at a 20%-50% discount to their issue price.<\/p>\n

The major concern for markets currently is inflation and the anticipated rate hike by the US Federal Reserve in a couple of days.<\/p>\n

Also Read: India\u2019s Crypto Firms Seek Tax Clarity from the 2022 Union Budget<\/a><\/h5>\n

US Federal Reserve\u2019s interest rate decision<\/h2>\n

Indian shares mirrored the decline in global stocks largely due to a rise in bond yields amid growing expectations that the US central bank will raise key interest rates<\/a>.<\/p>\n

Higher US yields and interest rate hikes tend to make investments in equities in emerging markets like India less attractive, leading to an outflow of foreign funds. This is why foreign portfolio investors (FPIs) have begun reorienting to less-risky assets like gold.<\/p>\n

FPIs pulled out $1.84 billion<\/a> (13,780 crore rupees) from Indian equities in the last one week alone, according to data by the National Securities Depository.<\/p>\n

\u201cPassive money is getting withdrawn from emerging markets, including India, influenced by US bond yield, Fed\u2019s tapering decision, and expected rate hikes as a result of high inflation in the US,\u201d Ravi Sardana, an investment banker told The Economic Times<\/a> newspaper. \u201cFPI-heavy stocks could be under pressure if FPI outflow intensifies.\u201d<\/p>\n

Among the 132 companies with over 20% FPI holding, 61 declined by up to 20% last week.<\/p>\n

Newly listed companies bruised<\/h2>\n

Shares of newly-listed companies like Zomato and Nykaa are reeling due to an aggressive sell-off<\/a>.<\/p>\n

The damage has been greater because some of these companies had valuations richer than what their fundamentals allowed. Analysts had also cited expensive valuations<\/a> as a cause of worry. Nevertheless, investors lapped up their public offers expecting high growth amid a low-rate environment.<\/p>\n

For example, the retail quota in Zomato\u2019s IPO in July 2021 was subscribed eight times. In Nykaa\u2019s case, it was 12.2 times.<\/p>\n

\u201cMost stocks that went public recently are very expensive and a much-needed correction is now underway,\u201d Anita Gandhi, director at financial services firm Arihant Capital Markets told Reuters<\/a>.<\/p>\n