Inflation Continues To Dog Domestic Markets

In 2022, equity markets around the world experienced a rollercoaster ride. Because of the uncertainty about the direction of inflation and the economy trajectory as well as the possibility of further market volatility, investors have been risk averse and have remained away.

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The BSE Sensex slumped 0.68 per cent in the last two weeks to 58,840 on September 16 whereas the Nifty 50 index closed at 17,530.85 points. Meanwhile, the Small-Cap index surged by 0.49 per cent to 29,199.39 and the Mid-Cap index declined by 0.09 per cent to 25,558.21. Rating agency Fitch reduced India’s projected GDP growth for the current fiscal year from 7.8 per cent to 7 per cent earlier this week, citing a slowdown brought on by increased inflation, tighter monetary policy and global economic stress.

The S and P BSE Power index was one of the top gainers among all the other indices. It gained 2.12 per cent to quote at 5,250.66 points. India will need additional coal-based capacity of up to 28 GW by FY32 besides the 25 GW already under construction, according to the draft-national electricity plan. A sharp rise in commodity prices seen in FY22, if sustained, can reduce players’ profitability as a result of which it affected the Realty index negatively.