Markets end the day in red, on expected lines

7 Jun 2022 , 04:29 PM

Indian markets today ended the day on an expected negative note. What is really troubling Indian equity markets is continued selling by Foreign Portfolio Investors (FPIs). There are two main reasons for this selling by FPIs. One is increase in interest rate in United States and the expectation of more interest rate hikes there.

The second reason is that FPIs are factoring in the problems that Indian economy is facing.  They are factoring in that the problems with Indian economy will remain there at least in the medium term. The India economy will first have to return to its pre-Covid level, and then start growing again from there. This is going to take some time. Rising inflation has compounded the problem. It has presented a trade-off between economic growth and high interest rates. Increase in interest rates to slow down inflation will also have the impact of slowing down of growth. This is because increase in interest rates tends to reduce interest sensitive investment and consumption.

Top Gainers today were ONGC, NTPC, and Coal India. Top Losers today were Titan, UPL, Dr Reddy.