Adani Rout, RBI Rate Hikes Wreck Indian Markets In Covid-Like Manner 

Indian equity markets fell for eighth day in a row on Tuesday, marking the longest run of losses for Indian equities since first lockdown was announced to contain the spread of Coronoavirus pandemic in 2020. 

In the last eight sessions, Sensex has fallen by 3.84 per cent and Nifty 50 index has crashed 4 per cent.  

The sharp selloff in markets is happening as liquidity dries up after relentless rate hikes by the Reserve Bank of India. This has evidently led to capital moving out of equities to debt market instruments. Aggressive selling by foreign institutional investors (FIIs) and sentimental impact after the selloff in Adani Group shares also added to the negative sentiment towards Indian equities, analysts said. 

Foreign portfolio investors have so far offloaded shares worth Rs 32,518 crore so far this year, data from the National Securities Depository Limited (NSDL) showed. 

 “FII liquidity is drying, December quarter corporate earnings were below expectations and earnings recovery will take time as inflation has started hurting everybody,” says market expert Avinnash Gorakksakar.  

 According to him, it is only natural that the selling pressure on a large conglomerate like Adani Group has a spill over effect on the wider equity markets. He says, “Interest rates are likely to go up and selloff at Adani Group has also shaken sentiment towards Indian markets. Whenever such a big selloff happens at a large group like Adani it hurts the entire sentiment in near term there are no positive triggers for markets.” 

On top of this, FIIs are getting risk free return of 8 per cent in US bonds that has also led to flight of capital from emerging markets like India to safety of US bonds, Gorakksakar adds. 

He advises retail investors to start nibbling good quality stocks as it is ideal time to build portfolio. 

Meanwhile, selloff in the markets has been so intense that only five shares in the Nifty 50 basket are in green and 45 index constituents have given negative returns. 

 Adani Enterprises is top loser in the Nifty 50 basket of shares, the stock has plunged 24 per cent in the last eight sessions to close at Rs 1,364.  

 The Adani Group shares have been facing selling pressure after the US-based short seller Hindenburg Research accused Adani Group of stock price manipulation and improper use of tax havens. 

 Cipla, Mahindra & Mahindra, UPL, Bajaj Auto, JSW Steel, Tata Consultancy Services, IndusInd Bank and Infosys also fell between 5-8 per cent. 

 “Markets are continuously witnessing selling pressure on back of global uncertainty, consistent FIIs selling and central banks around the world being hawkish to tame rigid inflation. Nifty ended February with a loss of 2 per cent its 3rd consecutive month of decline. Overall, cautiousness is likely to remain ahead of key macro data - India’s GDP and US consumer confidence - to be released,” says Siddhartha Khemka, Head - Retail Research, Motilal Oswal Financial Services.