New Delhi: July turned out to be the worst month for Nifty in 17 years. The NSE benchmark is on course to end the month 6 per cent lower, marking its biggest fall monthly drop since 2002.
Market sentiment was hit this month following disappointing announcements in Union Budget amid tepid corporate earnings.
In July 2002, Nifty had registered a 9.35 per cent fall, which was also its biggest fall that year. The index has ended July in the red on five instances in last 17 years. It fell 2.93 per cent in 2011, 0.95 per cent in 2012 and 1.72 per cent in 2013.
FII have sold equities around Rs 12,000 crore this July, leading to major wealth destruction across sectors. Nifty shed over 700 points during the month. The overseas portfolio investors had brought in over Rs 80,000 crore during February-June.
Siddhartha Khemka, Head of Retail Research, Motilal Oswal Financial Services, told ETNow that the income-tax surcharge hurt FPI sentiment, adding to the market’s woes.
The pain is even worse in the broader market. BSE midcap and Smallcap indices fell 8.52 per cent and 11.16 per cent, respectively, during the month.
However, stocks like Zee Entertainment and Asian Paints gained up to 13 per cent to help cushion the fall. Among others,
, Sun Pharma,
, Power Grid and Dr Reddy’s Labs managed to deliver positive returns to investors.
“Poor Q1 earnings, a slowdown in domestic consumption and the ongoing NBFC crisis have dampened investor sentiments on Dalal Street,” said Hemang Jani, Head of Advisory, Sharekhan by
“We are cautious on the NBFC space. Rising credit costs and higher provisioning are likely to impact bottom line and credit growth. As per recent reports and data domestic growth will be weaker over the next 12-18 months,” he said.
Khemka of MOSL said, “The broader market has turned weak mainly because of poor fundamentals. The underlying earnings growth has remained elusive and Q1 numbers have proved to be a dampener for earnings recovery expectations for FY20.”
Jani prefers stocks like Ramco Cement, HUL and Asian Paints which have shown decent growth in a challenging environment.