India’s stock market hit by slowdown woes

India’s stock market hit by slowdown woes

India’s stock market performance turned negative in all popular time frame. Either you take five days, a month, three months or a year, the Bombay Stock Exchange (BSE) delivered a negative return, thanks to deepening slowdown, especially the plunge in the first-quarter Gross Domestic Product (GDP) to 5 per cent.

In contrast, markets such as China and United States have delivered healthy returns. In the last one year, trading data shows that China’s Shanghai Composite Index and USA’s Dow Jones Industrial Average have delivered 9.36 per cent and 0.59 per cent return respectively.

In August, the market was not so bad, but last Tuesday’s blues wiped out all gains of investors. However, after losing 770 points or two per cent on Tuesday, S&P BSE Sensex gained 0.44 per cent to settle at 36,725 on Wednesday.

Indian exchanges have reflected weak investor sentiments in recent days. One of the most significant factors of this is the official GDP data, which indicates that India’s economic growth has slowed down to 5 per cent, the weakest in the last 25 quarters or six years.

Market experts said that the big blow to the stock market was weak domestic data. According to the official data, the growth of eight core industries dropped to 2.1 per cent in July due to contraction in coal, crude oil, natural gas and refinery products.

Dr Ravi Singh, research head of Karvy Stock Broking, told India Today, The weakening of rupee added more fuel to the sentiments. Lack of clarity, over-taxation of foreign portfolio investors, continuous foreign institutional investor selling and poor corporate earnings have also contributed to the weak market sentiment.

Despite the recent stimulus, foreign portfolio investments (FPIs) continue in selling mode. Headwinds to FPI flows into India will continue over the near-to-medium term despite the accommodative global monetary policy stance and the central government’s efforts to alleviate uncertainty regarding the higher surcharge, Arindam Som, an analyst with India Ratings and Research, said.

As the biggest movers of the stock market, FPIs already have withdrawal of more than Rs 30,000 crore from the stock market between July and August.

[“source=indiatoday”]