Latest news with #Chokkalingam
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Business Standard
4 days ago
- Business
- Business Standard
Sensex, Nifty face worst fall in a month, marking 4th straight weekly loss
Domestic equities fell on Friday, with benchmark indices posting their biggest weekly loss in nine months. Earnings disappointment, sustained selling from foreign portfolio investors (FPIs), and uncertainty surrounding the trade deal with the US weighed on sentiment. The Sensex ended the session at 81,463, with a decline of 721 points, or 0.9 per cent. The Nifty 50 index ended the session at 24,837, down 225 points, or 0.9 per cent. This was the biggest single-day fall for both indices since June 19. For the week, the Sensex declined by 0.4 per cent, and the Nifty fell by 0.5 per cent, marking the fourth consecutive weekly loss for both indices. The last time both indices posted a four-week losing streak was in the week ended October 25, 2024. The total market capitalisation of BSE-listed firms declined by Rs 6.4 trillion, reaching Rs 452 trillion. Infosys, which declined by 2.4 per cent, and Bajaj Finance, which fell by 4.7 per cent, were the biggest contributors to the Sensex decline. Bajaj Finance, which posted its biggest single-day fall since April 30, was also the worst-performing Sensex stock, as concerns over its worsening asset quality and high credit costs overshadowed strong loan growth. Other Bajaj group stocks also posted sharp losses. The decline in Infosys was attributed to the broader sell-off in the IT sector, amidst disappointment over tepid revenue and profit growth, making current valuations unjustifiable. The sell-off did not spare the beneficiaries of the India-UK trade deal, with many stocks in the textile, aquaculture, and automotive sectors declining. "A favourable deal with the UK was expected and priced in, so the signing was not a surprise. Moreover, the India-UK deal is only part of the puzzle. One has to see how the India-US trade deal shapes up and what kind of concessions India's export competitors get from the US and EU," said Chokkalingam G, co-founder of Equinomics. FPIs continued to be net sellers of equities worth Rs 1,980 crore, while domestic institutional investors (DIIs) were net buyers to the tune of Rs 2,139 crore. So far this month, FPIs have pulled out over Rs 20,000 crore from domestic markets, while DIIs have pumped in nearly Rs 40,000 crore. The market breadth was weak, with 2,969 stocks declining and 1,061 advancing. The broader Nifty Midcap 100 fell by 1.6 per cent, and the Nifty Smallcap 100 dropped by 2.1 per cent. "There is a bit of profit booking after the recovery from the April lows. However, the delay in the trade deal with the US is causing the biggest jitters in the markets. Investors are concerned about whether IT services will be impacted by tariffs," said Chokkalingam. In the future, corporate results and the trade deal with the US are expected to determine the market trajectory. "Elevated valuations in large-cap stocks, coupled with significant net short positions held by FPIs, added to the downward pressure. Moderation in DII inflows after the strong buying of the last 2-3 months, due to a muted earnings season and persistent FPI selling, continues to impact the current market," said Vinod Nair, head of research at Geojit Investments.
Business Recorder
16-07-2025
- Business
- Business Recorder
India equity benchmarks rise as soft inflation data fuels RBI rate cut bets
MUMBAI: India's equity benchmarks snapped a four-session losing streak on Tuesday, as lower-than-expected domestic inflation data boosted expectations of further rate cuts this year by the central bank. The Nifty 50 closed 0.45% higher at 25,195.80 points and the BSE Sensex added 0.39% to 82,570.91. The blue-chip indexes fell 1.7% in the past four sessions. All the 13 major sectors rose on the day. The broader mid- and small-caps added about 1% each. The short-term outlook of the domestic equity market looks robust considering favourable headline inflation, robust monsoon and prospects of a demand revival, said G Chokkalingam, founder and head of research at Equinomics Research. Domestic annual retail inflation slowed to a more than six-year low of 2.10% in June, near the lower range of the Reserve Bank of India's tolerance band, as food prices continued to ease, making a case for further interest rate cuts. Nomura expects 25 bps cuts in each of the RBI's October and December policy meetings, and also expects banking system liquidity to be kept in a surplus for effective monetary policy transmission. Equinomics' Chokkalingam said any adverse move on the US tariff front is the only key risk factor for Indian markets at the moment. Investor focus will now be on US inflation data, due later in the day, to assess the Federal Reserve's future rate action. Among individual stocks, Sun Pharmaceuticals rose 2.7%, as the launch of its anti-baldness drug Leqselvi in the US was expected to boost sales. Yes Bank gained 2.4% after Bloomberg News reported that Japan's Sumitomo Mitsui Financial Group is eyeing $1.1 billion investment in the private lender to buy an additional 5% stake. Bucking the broader trend, HCLTech dropped 3.3% and was the biggest loser among Nifty 50 and IT companies after India's No. 3 IT exporter reported lower-than-expected quarterly profit and lowered its annual margin forecast.
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Business Standard
23-06-2025
- Business
- Business Standard
Israel's TA-125 at new peak even as tensions flare with US strikes on Iran
Rising tensions in West Asia have not deterred the Israeli stock market, with the benchmark index surging to record highs despite fresh concerns following US strikes on Iran. Israel's TA-125 rose 2.2 per cent on Sunday to a fresh high of 2,931.9, just after the US struck three nuclear sites in Iran. Since the beginning of the latest attacks on June 13, the index has risen nearly 7.5 per cent, while the MSCI Asia ex Japan has fallen by 0.63 per cent. In the year so far, the TA-125 index has risen 18.9 per cent, while the MSCI Asia ex Japan and MSCI World indices are up 11.2 per cent and 4.83 per cent, respectively. Over the weekend, the US struck three nuclear sites in Iran with bunker-busting bombs, ending speculation of its involvement in the ongoing conflict in the region. US President Donald Trump declared the three facilities 'totally obliterated,' and warned of greater attacks unless Iran makes peace with Israel. Following the strikes, Iran vowed to retaliate, warning the US of "dire consequences" and has reportedly approved the closure of the Strait of Hormuz. Asked about the Strait, Iran's Foreign Minister Seyed Abbas Aragchi said that 'a variety of options" are available to Iran, adding that the country would defend itself by all means necessary. Why is Israeli stock market surging? The market is rising as investors and global markets bet on a contained conflict and limited escalation following the US strikes on Iran, according to analysts. There was initial concern that oil prices would spike and Asian markets would open sharply lower. However, that didn't happen, according to G Chokkalingam, founder and chief investment officer at Equinomics Research. He believes this indicates that both the equity and oil markets expect the situation to de-escalate, possibly leading to negotiations rather than a broader conflict. Regarding the Israeli market, its total market capitalisation is only around $429 billion, with equities accounting for $216 billion, Chokkalingam said. "This means even small domestic or foreign inflows can significantly impact the index." Additionally, confidence may stem from the US backing of Israel, which reassures investors that the economic impact will be limited, Chokkalingam said. "Unlike during the Ukraine war, when oil jumped nearly 30 per cent, the Israel-Iran conflict has caused only an 11 per cent rise in oil prices, reinforcing the belief that the war may remain localised and short-lived." Further, it is a preconceived notion that geopolitical tensions may lead to stock market corrections, analysts had noted earlier. "In fact, heightened geopolitical tensions can lead to more fiscal and monetary easing, and the market loves loose policies," according to Jitendra Gohil, chief investment strategist at Kotak Alternate Asset Managers. Back home, stock markets fell over 1 per cent in early trade, tracking cues from their Asian peers. As of 12:40 PM, the BSE Sensex index was at 81,828.57, lower by 575.47 points or 0.70 per cent, while the Nifty50 was at 24,942.95, down 169.45 points or 0.67 per cent.
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Business Standard
17-06-2025
- Business
- Business Standard
Are high oil prices always bad for market sentiment? No, suggests data
High oil prices do not always dampen market sentiment, suggests data. Back in fiscal year 2012 (FY12) when Brent crude oil prices shot up 32 per cent year-on-year (YoY) to $115 a barrel (bbl), the Nifty 50 index had tanked 9.2 per cent. Even with oil prices ruling at $110 and $108/bbl in FY13 and FY14 respectively, the Nifty 50 managed to post a gain of 7.3 per cent and 18 per cent in each of these two fiscal years, data shows. GDP (gross domestic product) growth grew at a healthy clip of 5.5 per cent (in FY13) and at 6.4 per cent (FY14) back then. Triple-digit crude oil prices, said G Chokkalingam, founder and head of research at Equinomics Research, were common between 2007 and 2014. Things, he said, changed from 2014 onwards as the US increased production and shale gas came into play. China, too, shifted focus on services rather than solely manufacturing, which calmed oil markets. 'There were some structural changes. Alternate sources of energy such as solar and wind also took centre-stage besides crude oil post 2013-14. Oil and stock markets had started to discount higher shares of these two sources back then. A higher oil price is not always bad for the market sentiment, unless they run away too fast, too soon and stay elevated for a long period of time,' Chokkalingam said. In FY22 as well, the Nifty50 index moved up around 19 per cent when crude oil prices averaged $81/bbl during the fiscal year, up 81 per cent as compared to FY21. Even with a rise (crude oil price) of around 19 per cent the following year to an average of $96/bbl, the fall in the Nifty50 index in FY23 was a modest 0.6 per cent. Dangerous complacency That said, global stock markets, said Nigel Green, CEO of deVere Group, a global consulting firm managing nearly $12 billion in assets under management (AUM), are showing a 'dangerous complacency' in response to the sharp escalation of military conflict between Iran and Israel. 'This isn't resilience, it's a mispricing of risk. Investors are leaning into a narrative that no longer fits the facts.' 'Gold and oil are reacting appropriately to heightened geopolitical risk. Equities are not. Volatility remains artificially low. That divergence should concern every serious investor,' he cautions. Israel's recent counterstrikes mark a significant intensification, targeting infrastructure inside Iran—a move seen by many as a shift away from proxy warfare and toward direct state conflict. The risks to global energy markets, analysts said, are growing. The Strait of Hormuz, which Iran could disrupt, carries roughly 17 million barrels of oil per day—nearly 20% of global supply. If the conflict persists, some even see oil prices hitting $150/bbl in the worst-case scenario. "Even the threat of closure or interference would likely push oil well beyond $100 per barrel, reigniting inflation and altering the current trajectory of interest rate policy in developed economies. If energy prices rise sharply from here, that disinflation story evaporates. Rate cuts could stall. Market momentum could reverse,' Green said.
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Business Standard
19-05-2025
- Business
- Business Standard
IT stocks fall as Moody's downgrades US sovereign credit rating to 'AA1'
Indian IT stocks declined and the Nifty IT fell by 1.3 per cent on Monday after Moody's downgraded the US sovereign credit rating last week to "AA1" from "AAA". All the constituents of the IT index traded with losses. Mphasis, which fell by 2.5 per cent, declined the most, followed by Infosys, which fell 1.9 per cent, and Coforge, which dropped 1.8 per cent. Moody's said its downgrade reflects the increase over more than a decade in US government debt and interest payment ratios to significantly higher levels than similarly rated sovereigns. "Successive US administrations and Congress have failed to agree on measures to reverse the trend of large annual fiscal deficits and growing interest costs," Moody's said on Friday. The downgrade comes as the US economy is staring at a slowdown, and President Donald Trump is restructuring trade deals with the US's trading partners. IT stocks fell as Indian tech firms earn a major portion of their revenue from the US. Analysts, however, termed the decline in IT stocks as a knee-jerk reaction and said the downgrade will not have much impact on the prospects of IT firms. 'The US markets have gone up even after similar downgrades in the past. The impact on IT stocks will be temporary. But IT stocks have their problems. The IT firms are posting poor single-digit revenue growth in dollar terms, which will not change much because of the rating action,' said Chokkalingam G, founder of Equinomics. Chokkalingam added that big IT firms are sitting on cash and have few expansion opportunities. "Large IT firms have been returning the cash they generate to shareholders through either buybacks or dividends instead of diversifying. The only option left for them to grow is acquisitions. Going forward, we could see mid-sized IT firms getting acquired. Otherwise, revenue growth in dollar terms will further shrink," said Chokkalingam. In the future, the pain in IT stocks is likely to continue. "The outlook for the IT sector is slightly negative. Large corporations in the US will try to cut costs from the new contracts they are signing with IT firms. The slump in their earnings growth is not getting reflected in their valuations. Moreover, there is a lack of clarity on how the trade agreement will shape up and if there will be any impact on the IT sector. Investors should ideally be underweight till there is clarity on US trade policy and one sees the next leg of new contracts the IT firms bag," said UR Bhat, cofounder of Alphaniti Fintech. So far in 2025, the Nifty IT index declined 13.5 per cent.
