$8 trillion investor assets wiped out as covid fears flare up again

India’s benchmark indexes see biggest drop in three months, wiping out $8.33 trillion in investor assets, driven by concerns about stronger US Federal Reserve rate hikes and a resurgence of covid cases in China and other parts of the world .

The National Stock Exchange’s Nifty Index fell 1.77% to close at 17,806.8, while the Sensex fell 1.6% to 59,845.29. This is Nifty’s biggest daily drop since September 16 and September 23 for Sensex.

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Shares in 47 of the 50 members of the Nifty index fell, with Adani Ports falling 7% to $794 and the leading group Adani Enterprises plummeted 5.85% to $3,642. Tata Motors, Tata Steel and Hindalco were the other big losers, down 4-5.7%.

U.S. GDP growth in the September quarter was unexpectedly revised up to 3.2% year-on-year from the previously reported 2.9%, stoking fears of a more aggressive Fed rate hike. The Covid spike in China and other Asian markets also worsened market sentiment.

FII sold temporarily $706.84 crore worth of shares on Friday, while DII bought temporarily $3,399 cores. This means that retail investors trading in the secondary market have been dumping stocks across industries, especially in small and mid-cap stocks.

This is reflected by the Nifty Midcap 100, down 3.76% to 30,158, and the Nifty Smallcap 100, down 4.72% to 91,82.55. New-age stocks are under a lot of selling pressure, with Nykaa hitting a new 52-week low of $139.35 before paring some of the losses.

With the psychological 18,000 on Nifty and 60,000 on Sensex breached, analysts advise caution with expectations of booking extra profits as the Indian market is relatively more expensive compared to other emerging markets.

Shrikant Chouhan, head of (retail) research, Kotak Securities, said: “Strong economic data in the US should keep interest rates higher and reduce capital outflows into their emerging markets. I. Asian markets are bearish, which is indirectly negative for markets that are doing well as valuations will remain high for those countries.

Investors’ growing concern was underscored by India’s fear gauge VIX rising 6.4% to 16.16. Rising VIX signals increasing risk appetite. The rupee fell 10 paise to 82.86 to the dollar. The outlook remains dim, with support at 18,000 now becoming resistance. A bounce, if it occurs, will be sold in, analysts say.

“On the other hand, we expect Nifty to drop to 17,560, which is the 61.82% Fibonacci retracement of the 16,748-18,887 rally,” said Jatin Gedia, technical research analyst, Sharekhan of BNP Paribas. ,6. “In terms of levels, critical support is located at 17,730–17,700 and immediate resistance is at 17,930 – 18,000.” Nifty is down 5.7% from its lifetime high of 18,887.6 on Dec 1 to 17,806.

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