With the benchmark indices continuing to fall on the back of massive foreign portfolio sell-off and gradual rise in bank interest rates, retail investors’ position in the equity market will be perceived as a force to be reckoned with.
Taking cues from global markets, equity indices posted their worst week in two years on June 17 amid concerns over foreign capital outflows, rate hikes by central banks across the world and stubborn inflation.
The BSE benchmark Sensex closed 135 points or 0.26 per cent lower at 51,360, while Nifty closed 67 points or 0.44 per cent lower at 15,293 in its sixth straight session.
In the last one week, the Sensex had fallen 1,487 points while the Nifty had lost 499 points.
hike in FD rates
On the other hand, reacting to the increase in the repo rate (at which RBI lends to banks), several banks including SBI, HDFC Bank, Bank of Baroda and Kotak Mahindra Bank, IDBI Bank and Punjab National Bank have reduced their fixed deposit rates. has increased. In the last two months, RBI has announced two consecutive repo rate hikes from a cumulative 0.90 per cent to 4.9 per cent.
Country’s largest public sector bank SBI has increased its FD rates to 4.60 per cent and 5.35 per cent per annum for deposits of less than ₹ 2 crore for tenures ranging from 211 days to less than three years. Senior citizens will get 0.5 percent higher rate.
Shibani Kurian, Head of Equity Research, Kotak Mahindra Asset Management Company, said inflation has clearly taken center stage and is one of the key drivers driving the monetary policy stance and the markets have rallied last week amid persistent high inflation. Responding to rising risks of a global recession.
In the near term, he said key factors to track include inflation and monetary policy, the trajectory of commodity price movement particularly oil, developments on the Ukraine-Russia war, and outlook on domestic demand and corporate earnings.
VK Vijayakumar, Chief Investment Strategist, Geojit Financial Services, said that a group of investors will definitely shift from equities to bank fixed deposits with rising interest rate, but the movement will intensify only when Nifty hits the 14,500 level.
The macro image of the Indian economy still appears bright with rising bank credit to corporates, higher direct taxes and GST collections, though inflation remains a concern, he added.
Direct tax collections grew by 51 per cent to Rs 2.8 lakh crore in the current quarter till June 15, from Rs 1.85 lakh crore in the same period last year. Between April 1 and June 15, the total advance tax collection grew by nearly 49 per cent to ₹42,680 crore (₹28,779 crore).
Published on
18 June 2022