Which sectors moved equity markets in August 2022?

  • India Infoline News Service
  • 01 Sep , 2022
  • 7:01 AM
The loosening of monetary policy in China may be in stark contrast to what the rest of the global central banks are doing, but it is surely helping the metal stocks. PSU banks are finally seeing re-rating after a strong June 2022 quarter when these banks saw a sharp fall in gross NPAs and lower provisioning.

In the last few months, inflation has been the bugbear of macroeconomic policy. However, August saw some clear inflation relief, both in India and the US. The US consumer inflation fell sharply to 8.5%, although food inflation remains a worry. In India, the CPI inflation tapered but more importantly, there was a 270 bps tapering in WPI inflation which is positive news for the supply push inflation that has pushed up input costs.

FPI flows were the big story of August 2022. After net outflows of $33 billion for 9 months between October 2021 and June 2022, there was a turnaround in July 2022, albeit with marginal net inflows into equities at $618 million. August saw a change in fortunes as FPI inflows into equities surged more than 10-fold to $6.44 billion. With the rupee stabilizing around 80/$, the first signs of risk-on from FPIs was visible in August 2022.

In volatile August, Nifty ends with 3.5% gains

The Nifty returns at 3.5% in August 2022 were nowhere as impressive as 8.7% in July, but this is on a much higher base. Also, the month of August had several headwinds in the form of hawkishness of Fed, rate hikes by RBI, recession fears, concerns over the tone at Jackson Hole symposium, GDP growth etc. Here are some of the key factors that determined the market trend for August 2022.

a)      Fears of recession once again took oil prices down in August. Brent crude dipped as low as $92/bbl before signals of supply cuts from the OPEC led to a bounce in price. The oil prices were in the range of $92/bbl to $105/bbl with a downward bias. For the last 2 months, oil has been in a comfort zone; both for the buyers and the sellers.

b)      If the FPI flows turned around in July, it was decisively positive in August. With $6.44 billion of inflows into equity and close to $1 billion into debt, it looks like risk-on investing is back in vogue with the FPIs. A mix of solid macros, policy clarity, promise of stable GDP growth, sound Q1FY23 results and bottoming rupee helped FPI sentiments.

c)      August 2022 was also the month when monetary policy boundaries were set, giving a lot of clarity to traders. Fed chair, Jerome Powell, underlined at Jackson Hole that Fed would not relent on rate hikes till inflation hit 2%. Now 3.75%-4.00% looks like the terminal target for the US markets. Of course, inflation will hold the key.

d)      RBI hiked rates by another 50 bps in the August policy taking the rates a good 25 bps above the pre-COVID rate. Now, it looks like the terminal repo rates in India would be closer to 6.5%. However, the good news is that CPI inflation and WPI inflation have been retreating rapidly in India.

e)      The Q1FY23 results season ended on a positive note. Total revenues across sectors were higher on a yoy basis and on sequential basis. Most of the profit pressure was driven by the negative marketing margins of oil marketing companies. Overall operating margins did take a hit. Top line growth also came from pricing advantage and not from volumes.

The headwinds are still there but August did see these challenges gradually waning as growth levers stayed robust despite an aggressive inflation control program.

Metals and banks again dominate the rally in August 2022

Here is a quick look at how the key sectors performed in August 2022. Out of the 10 sectors evaluated for August 2022, 8 out of the 10 sectors gave positive returns. While 6 sectors outperformed the Nifty, there were 4 sectors that gave lower returns than the Nifty. Among general indices, Nifty was up 3.50%, Mid Cap index up 6.23% and Small Cap up 4.91%.

Data Source: NSE

Unlike July 2022, when all the 10 sectors saw positive gains, only 8 sectors gave positive returns in August 2022. Metals were once again the star of August 2022, gaining 8.18%. While the toning down of the export taxes on metals has helped, the soft rate policy adopted by China has been a key factor. China continues to be the biggest driver of global metal prices. Even as the global central banks are tightening, the PBOC has been reducing rates to revive growth. That gave the much needed boost to metal stocks in August 2022.

August 2022, again, saw an impressive performance by the PSU banks and the private banks. While PSU banks gave 7.84% returns in August, private banks also gave an impressive 6.69%. This comes on top of double digit returns in July. While banks are expected to lead the recovery in GDP, the latest quarter results have shown clear improvement in banking profits due to lower provisioning and improved asset quality. Lower credit costs helped the private banks and even PSU banks to expand net interest margins (NIMs) in the quarter.

Among other sectors that did better than the Nifty were oil & gas at 6.58%, consumer durables at 6.39% and automobile at 5.37%. With oil prices stable, upstream stocks put up a strong performance. But, the enthusiasm on oil was largely on the back of big expectations that had been built up in Reliance Industries ahead of its 45th AGM. While Consumer durables were more of a defensive bet, auto stocks bounced back on better offtake numbers and amidst auto stocks gaining a much better hang of their supply chains.

IT and Pharma once again disappoint in August 2022

For the second month in succession, the IT index underperformed the Nifty. While the IT index returns were positive in July, the IT index ended up contracting by -2.55% in August. July had seen most of the IT companies facing margin pressures and higher attrition in Q1FY23. However, August was when the impact began to show. A slew of top IT companies including Infosys, TCS, Wipro and HCL Technologies either cut variable pay or held back variable pay. They did the same with employee bonuses too. Clearly, the IT sector was preparing for lower tech spending in the US and Europe and that did not go down well with the markets. Pharma also lost value in August on fears of higher competition and thinner margins in the US generics market.

August has seen a turnaround of sorts at a macro level. September would focus on how well the IT stocks are able to recover from their sentimental lows!

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Which sectors moved equity markets in February 2023?

  • 01 Mar , 2023
  • 10:43 AM
  • The month of February 2023 was another disappointing month for the markets as the fall in the Nifty continued.

To compound the problems, the FPIs sold another $647 million of equities in February, over and above the $3.52 billion it sold in the month of January 2023. However, it was not just the FPI selling but even the global cues were not too favourable. But more of that later. Firstly, here is a quick look at key index returns for February 2023.

Sector / Index

February 2023 Returns (%)

Mid Cap Index


Nifty 50 Index


Small Cap Index


There was selling across the board in February, with the smaller stocks the worst hit as the quarterly results were under a lot of pressure in the third quarter ended December 2022. While the sales growth was strong overall, the margins came under pressure. But, first a look at the international triggers bothering the markets.

Global macros take a toll on the market

Global triggers for the market were centred on two fronts. Firstly, there was pressure from the hawkishness of the US Fed. The Fed did raise rates by just about 25 basis points in the February meeting of the Federal Reserve. However, what really spooked the markets was the subsequent statements of the Fed governors and the minutes of the FOMC meeting published on 22nds February. The minutes made it crystal clear that irrespective of the quantum of rate hikes already undertaken (450 bps since March 2022), the rate hikes would continue till inflation remained a problem. In fact, the minutes of the Federal Open Markets Committee (FOMC) not only hinted at more rate hikes in the year 2023, but also ruled out any rate cuts in the year and also hinted at terminal rates in the range of 5.50% to 5.75%.

The global hawkishness also had an impact on the stance of the RBI, which also turned distinctly hawkish. But the bigger concern was the impact of weakness in global demand. To begin with, the corporate results for the third quarter clearly showed signs of export sales waning across various sectors. In addition, the export data faltered at a macro level showing that global companies and importers were going slow on consumption and inventory accumulation decisions. With the Fed hinting at more rate hikes, it is likely to raise the inflation expectations globally, and this is likely to be the story across the developed markets like the US, UK and even Europe. Clearly, the global slowdown appears to be a much bigger challenge for the Indian markets, and that translated into index weakness.

Domestic triggers impacting equity markets in 

While the global factors did play a part in depressing the stock markets in February 2023, domestic factors also played a major part. 

  1. In line with the Fed, the RBI also adopted a very hawkish stance on rates. In the February policy, the RBI hiked rates by another 25 bps and the minutes of the RBI MPC clearly indicates that the committee would go ahead with rate hikes till inflation came under control. The RBI repo rates are already at 6.50% and now it looks like the terminal rates for the repo could be well beyond 7% during the current calendar year. 

  2. FPI flows continued to be the weak link in February 2023, albeit not as negative as January 2023. After net FPI inflows of $1.36 billion in December 2022; the month of January 2023 saw FPI outflows of $3.52 billion. In comparison, the FPI selling of $647 million was relatively lower in February 2023. However FPIs remained net sellers on most of the days during the month, and that is not great news.

  3. The other concern for the Indian markets was that Indian stock market valuations are now looking less attractive compared to its Asian emerging market counterparts. That has already resulted in a lot of FPI funds flowing out of India and into other Asian markets like South Korea, Taiwan and Indonesia, where valuations are more attractive.

  4. Quarterly results for December 2022 also put pressure on the markets in February 2023. Overall, the operating margins came under pressure, but more importantly, the interest coverage of non-banks has weakened in the December 2022 quarter due to higher interest costs. Also, as deposit rates catch up with lending rates, the perception is that the advantage that banks had for last two quarters would also gradually wane.

Union Budget 2023-24 did have some positives in putting more money in the hands of people, checking the fiscal deficit for FY24 and also the big thrust to capital spending and infrastructure outlays. However, markets are currently reflecting short term concerns, and these are not going away in a hurry.

Sectors that flattered and those that faltered in February 2023

The month of January 2023 saw a very diverse performance of sectors. Of the 16 sectors evaluated, only 2 sectors (FMCG and Digital) showed positive gains. All the other sectors gave negative returns.

Sector / Index

February 2023 Returns (%)





Information Technology (IT)


Private Banks


Consumer Durables


















Oil & Gas


PSU Banks




Data Source: NSE (shaded sectors outperformed Nifty-50)

Clearly, the negative returns are outweighing the positive returns, but there are 6 out of 16 sectors that outperformed the Nifty.

  1. The two sectors to shine and stand out in the month were the FMCG sector and the digital sector. The FMCG sector gained from better rural sales in the quarter and pricing power sustaining for most of the FMCG companies. But the real thrust for the FMCG sector came from ITC Ltd, which has held up and touched new highs amidst very difficult market conditions. The digital space returns were largely driven by HCL Technologies.

  2. There were several other sectors that, despite negative returns, fell less than the Nifty in February. These sectors include IT, private banks, consumer durables and infrastructure. Clearly, IT and consumer durables were on the back of defensive buying. Private banks once again gave stellar NII growth and NIMs in the quarter. Infrastructure stocks did get a big boost from a rather favourable budget announced by Nirmala Sitharaman.

  3. Among the underperformers for the month were metals, PSU banks and oil & gas stocks. Metals saw pressure from input costs and falling prices as the demand thrust from China was more than offset by global weakness concerns. PSU banks have rallied too sharply in the last one year and it was more a return to reality. Oil & gas stocks took a hit on the back of shaky oil prices amidst demand and supply pressures.

  4. With rising rates, some of the rate sensitive sectors also came under pressure and underperformed the Nifty. Automobiles, realty and housing were classic examples of rate sensitive stocks coming under pressure in February. Pharma also came under pressure with a slew of investigations launched by USFDA into pharma company operations during the month of February 2023.

To sum up the story of February 2023, the markets started off on a strong note with the Union Budget, but it was a rude return to reality. Fears of a global slowdown, sustained hawkishness of central banks, rising inflation and weak quarterly numbers were the key pressure points that the stock markets had to contend with during the month.

Indian equity markets see another green ending

  • India Infoline News Service
  • 01 Nov , 2022
  • 4:04 PM
Markets saw yet another day in green today. Nifty 50 ended,  up by 129.9 points. BSE Sensex ended, up by 374.76 points. Top Gainers today were Adani Enterprises, Divis Lab and NTPC. Top Losers today were Axis Bank, UPL and Eicher Motors.

Midcap stocks again saw strong buying demand today. Nifty Midcap 150 index ended the day, up by 0.84%. Banking stocks and media stocks saw selling pressure today. Strong buying demand was seen in Pharma stocks, healthcare stocks, IT stocks and Realty stocks. Metal stocks also saw very strong buying demand today.

PNB, Suzlon and Yes Bank were among stocks that saw very high trading volume today. At NSE 60 stocks touched their 52 week high today. 32 stocks touched their 52 week low. 


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  • 01 March, 2023 |
  • 3:30 PM

The month of February 2023 was another disappointing month for the markets as the fall in the Nifty continued.

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