Thread by @BiIndia

#StockMarket | The market in India is bummed out for at least three reasons and none of them are going away in a hurry

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@Bhaktimakwana18

@Bhaktimakwana18 Sensex and Nifty50, the two benchmark indices that reflect the moves in the country’s biggest listed companies, are down 2% each. The market mood in India is similar to much of the world that’s fearing a war between the US and Russia over Ukraine.

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@Bhaktimakwana18 But that’s not it. There are other factors playing on the traders mind for a few weeks now and that would explain why the Sensex has lost over 6% of its value in the last one month.

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@Bhaktimakwana18 An outright conflict in Ukraine is likely to disrupt global crude oil supply. That could lead to a higher import bill for India, which relies on other countries for more than 80% of its crude oil demand.

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@Bhaktimakwana18 Having to pay more for crude oil erodes the country’s dollar reserves, weakens the rupee, increases the cost of doing business and squeezes people’s purchasing power.

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@Bhaktimakwana18 “World markets were trying to digest record inflation in the US but the surge in geopolitical tension spoiled the mood. ” said Parth Nyati, founder at Tradingo.

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@Bhaktimakwana18 "There is some sentimental impact of the bank fraud issue of ABG group on banking stocks but it doesn't have a material impact as it is already part of NPA,” Parth Nyati, added.

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@Bhaktimakwana18 Record inflation in the US is forcing the American central bank to suck out the excess cash in the system with interest rate hikes, the first of which is scheduled in March.

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@Bhaktimakwana18 Rise in the US interest rate does not bode well for the Indian markets. This is because foreign investors pull out their investments from the Indian share and bond market and shift it to the US markets.

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@Bhaktimakwana18 If these macroeconomic risks weren’t enough to make the Monday morning blues worse, two of India’s biggest banks, the State Bank of India (SBI) and ICICI Bank were hit in the biggest bank fraud in the country ever.

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@Bhaktimakwana18 The owners of ABG Shipyard allegedly siphoned some of the loans given to the company and even invested some of that money in an overseas subsidiary.

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@Bhaktimakwana18 This is the biggest loan fraud in India since 2017, when similar cases came to light at the Punjab National Bank (PNB). The accused, diamond merchants Nirav Modi and Mehul Choksi, are still to be apprehended.

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