Indian equities closed in red on Friday although most of the Asian markets and markets in Europe and US were in positive side trading in green.
The market experts says that the main reason for this bearish trend is the increase in the inflation numbers and RBI's statement that this could mean further interest rate hikes, sentiment has been negative throughout the week leading to inactivity and indifference among investors.
Mr. Alex Mathew, Head of Research, Geojit BNP Paribas said that " The rate hikes will negatively impact the FII participation as well as corporate performance as the cost of borrowing money will now go up "
The Indian markets along with the global markets, have been declining from August 5 on wards since the credit rating agency S&P downgraded the US Credit rating from AAA to AA+.
FIIs are withdrawing funds from the markets, while Domestic institutions are on the buying side. Retail investors are also on the buying side.
For the period between August 5 and August 12, FIIs were net sellers for Rs.5, 657.31 crore whereas Domestic institutions were net buyers for Rs.4, 671.03 crore. Retail investors are also on the buying side. They purchased for Rs.287.94 crore on BSE.
Actually the market maintains an average level because of the buying of DIIs and retail investors.
When we observe the graph we can show some interesting information.
Dow Jones Industrial average down by 2.6 percent. Sensex also down by 2.7 percent because of the negative news from around the globe.
The high selling pressure from the Indian markets affected all major blue chips companies especially Tata motors and Infosys. The reason why Tata motor's price is down by 9.9 percent is that their monthly sales in the month of July decreased by about 38 percent.
Infosys and other major IT companies like TCS, Wipro , HCL Tech also facing the same problem because their biggest markets are US and Europe.
NSE volatility Index (VIX) was at 8.5 percent. This is a very important point to be take care of. Since Volatility index represents 'the rate and magnitude of changes in price.'
People are watching how the situation in Europe and US unfolds. The market can expect a bullish trend only after the negative news are solved. Lets hope for the best.
Regards Hari " लोका समस्ता सुखिनो भवन्तु "
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