InvestorQ : How do you see the outlook for the stock markets on Tuesday 23rd August 2022?
Niti Shenoi made post

How do you see the outlook for the stock markets on Tuesday 23rd August 2022?

diksha shah answered.
2 months ago

It was almost like a Black Monday on 22nd August as the Nifty ended nearly 267 points lower and the Sensex 872 points lower. In just 2 days, the Sensex has lost over 1,500 points in the sell-off. The worry is that the sustained anti-inflation stance adopted by the US Fed members would push the US into recession. Minutes of the Fed were still hawkish.

Markets were also jittery ahead of the Jackson Hole Symposium of central bankers which starts on 25th August and concludes on 27th of August. The advance decline ratio or the A/D ratio at 5:45 underlines the market concern that Jerome Powell may reiterate a very hawkish tone while addressing the symposium. That could be negative for markets.

What about FPI buying on Monday. Foreign investors were net sellers in equities to the tune of Rs.454 crore while the domestic funds and LIC sold stocks worth Rs.85 crore. Interestingly, this marginal selling comes on the back of nearly $5.5 billion infused in equities in August 2022 and the markets fell more due to unwinding of positions.

Global markets in the second half continued the sharp fall. The Dow closed 643 points lower while NASDAQ was down 324 points on Monday on fears of dollar appreciation which is negative for the export driven technology business. Europe lost more than 2% on Monday on slowdown fears. SGX Nifty is down 43 bps in early trades on Jackson Hole fears.

There has been a major sell-off across the global markets as investors are going light on equities ahead of the Powell speech at Jackson Hole later this week. If Powell adopts a very hawkish stance, as he is likely to do, markets could see another round of sell-off. Also, the bounce in 2 months has been almost unreal and there is some tapering of markets likely.