Summary: The risk-off sentiment has gripped the investor psyche which has spared no asset class thus far in 2022. Not just equities, but investors across most asset classes, including cryptocurrencies and metals, have seen negative returns on their investment. A massive sell-off in cryptocurrencies, for instance, wiped over $200 billion of wealth from the market in just 24 hours. While Bitcoin plunged 10% its lowest level since December 2020, Ethereum dropped as much as 16% on Thursday, May 12. Thus far in 2022, Ethereum has cracked 45%. Meanwhile, among equities, the US indices have sunk the most as fears of steeper rate hike coupled with recession plague markets. Back home, the Indian benchmark indices seem to have fared comparatively better so far. Bond markets, on the other hand, have seen the India 10-year G-Sec yield rise from 6.01 per cent a year ago to 7.25 per cent now. Meanwhile, retail inflation surged to an 8-year high of 7.8% in April. Analysts say these negative returns have largely been triggered by panic selling by new investors who exited in droves in the backdrop of rising interest rates, inflation worries and the geopolitical situation. Going ahead, analysts expect equity markets to stage a recovery in the later part of the year as these new investors make a comeback. That said, the near-term texture of the overall market remains weak despite intermittent bounce-backs. According to Anand James of Geojit Financial Services there is a low probability of a breach below 15,671. Pull back rally can lead the Nifty to 16,220 and consolidation in 15,945 - 16,090 is the key, he says. There seems a low probability of an all-out panic-driven collapse or a breach below 15,671. The reaction rally that could unfold thereof has room for upside till 16,220. However, consolidation in the 15,945-16,090 region is the key for setting the course for a vertical rise to the 200-DMA at 17,251. In the week ahead, investors will focus on the likely listing of LIC on the bourses on May 17. India’s largest insurance company set its issue price at Rs 949 per share. That apart, primary markets will stay abuzz with Paradeep Phosphates and Ethos’ initial public offers. Lastly, the last leg of March quarter earnings will see more than 400 companies announcing their quarterly report card this week. Some of the prominent ones include Bharat Forge, Bharti Airtel, DLF and ITC.
