InvestorQ : Why Nifty and Banknifty has falling sharply
Sumit Bhartiya made post

Why Nifty and Banknifty has falling sharply

Khushi Patel answered.
5 months ago

The fall in the Bank Nifty and Nifty are related because they have a high correlation due to the high proportion of banks and financials in the overall index. The fall in banks and other rate sensitives was due to two reasons. Firstly, the hawkish not by the Fed raised fears of an early spike in interest rates. That is negative for loan growth and also for investment portfolios of banks.

Secondly, the Omicron virus has once gain raised the risk of lockdowns and travel restrictions. It is feared that if the Omicron spreads fast and results in more casualties, then we could another round of disruption and would impact the asset quality of banks as borrowers could come under stress.