The day’s sell-off on Dalal Street was led by foreign funds that net sold stocks worth Rs 7,482 crore, taking this year’s net outflow to close to Rs 1 lakh crore, BSE and CDSL data showed.
The war-induced sell-off also left investors poorer by Rs 5.6 lakh crore with BSE’s market capitalization now at Rs 244.2 lakh crore. Since recording an all-time peak at Rs 283.2 lakh crore on January 17 this year, investors’ wealth is now down by nearly Rs 40 lakh crore or about $500 billion, official data showed.
Despite sharp sell-off in recent weeks and a grim short-term outlook, fund managers are telling investors to not react in a haste and liquidate their holdings in stocks. “History is replete with several instances where investors who have stayed focused on long-term compounding from equity returns and investment objectives based on individual risk-reward profiles, have significantly benefited by taking advantage of such steep market corrections,” said Taher Badshah, CIO, Invesco Mutual Fund. “We reckon the present situation is another such occasion.”
Market players also pointed out that despite the general sell-off, stocks from some sectors like metals and commodities are rallying. BSE data showed stocks like Coal India, Tata Steel Hindalco, ONGC and several other stocks have gained up to 26% since February 26, the day Russian tanks rolled into Ukraine. As a result, BSE’s basic material index is up 4.6% during the same period while the sensex has lost 3.2%.
Top fund managers and market players said that every war brings with it uncertainty and hence it’s better to refrain from predicting the market’s trajectory. On the one hand the world is looking for a solution to the Russia-Ukraine conflict, but at the same time surging prices of crude oil and other commodities are weighing on sentiment. A prolonged war would hurt economic growth and push up inflation, a report by Kotak Securities noted.
Technically, in the short run, the nifty could face resistance at 16,000 level while it has support at 15,700 level, chartists said.