Would the Market Downtrend Continue ?

The Indian markets are currently trapped in the range of 17400 to 17800 due to multiple factors. The major ones are the Adani Downfall making the investors get cautious about their investments across the markets. Another reason is the budget announcement which led to a sudden rise and fall in the market segment. Alongside this the Fed Rate hike also took a place in maintaining the nifty50’s range boundation streak. 

Market Downfall and other Factors

The major reason behind the market downfall is not only the Adani Saga but also the Fed rate hike. The US Fed was supposed to give a rate hike and everybody knew the same. However the markets did not respond well to it and the start of it is traced back in the January month as well. Since the Fed declared its minutes of meeting the markets took a deep dive and all the indices suffered tragic losses. However one of the major reasons for a recovery was the bet on the banking stocks.

In the previous quarter majorly all the banking stocks have given excellent results which put them back into the riding gear. Hence the markets were getting a mighty push from the Bank Nifty cruising to new all time highs now and then. The effect of the same was also noticed in the Nifty50 due to the heavy weightage of Banking stocks in the Nifty50 index.

However, the Hindenburg Research group put forth a report of Adani Group being a Fraud. This was put out in public with multiple profs attached from the research group. The group is also a short seller apart from being a research house and enhancing their short position was the way of telling the world that they have finally ended their 2 year research on Adani Group and this ended up in the results of Adani Group being declared as a Fraud.

Adani Saga

After this the Adani FPO did not sail through till the 2nd day but on the third day the FPO was fully subscribed. However, due to the bleeding in stock prices, Gautam Adani called off the FPO stating that they care about their investors more than they need this money for liquidity in their company.

As per the reports the Adani Group is soon going to experience a heavy liquidity crunch and this has come at a time when banks like CITIGROUP, Credit Suisse etc. have made the Adani Bonds put with them negligent. They declared that the bonds kept would not be taken as a security against the margin loan anymore and hence the bonds became negligent and they are even threatening to sell them in the open market for recovery of money.

All such news has created a trauma of fear inside the Indian Stock Market. Not only this the markets are investors are now freaking the situation of Foreign investments being taken out of the Indian markets if the Adani Story is real. Hence the major reason behind the downfall current can be the Adani Saga but there’s more to the story.

As soon as the Hindenburg group put the short selling, for fulfilling the FPO requirements LIC doubled its investments and major families of India like Reliance, Mittal, etc. came to aid the FPO capital requirements. Hence there seems to be a major hope in the Adani story and this can be a ploy just to destroy the future plans of the company and to make them suffer a heavy liquidity crunch.

Further Roadmap for Markets

The further teen of the market seems stagnant or more tilted in the favour of an upside. The simple reason was the budget movement. During the budget announcements the Nifty50 rose to 17800 levels and above within a short span of time but due to rapid selling and a fear situation the markets again collapsed down to 17400 levels and gave a closing of 17600 levels at the end.

This was a major volatile day but it gave the investors some hope that the markets could recover strongly in the short term. Not only this the stocks in the Indian markets have given a great quarterly performance and enhance the investors are bullish on this quarter as well. 

The only fear is the Adani Story because if this story turns real, then there are multiple banks with huge exposure in the group. This would directly trigger a loss of valuation in the pr9ces of all the banking companies involved as well and this would definitely bring down the markets with huge margin.

Hence no new positions should be created and even if a person is involved in trading it is advised to exit every position by the end of the day’s session. The time currently is not for averaging or investing but for scalping and making quick profits.

Looking for Best Stock Broker in India?

we will help you to find best broker with Free demat & lowest brokerage