Indian stock traders continue to be very bearish on Monday, as the India VIX and rates continue to cause headwinds in stocks.
NIFTY 50
Indian stock traders continue to be very bearish as the Nifty 50 has fallen through a major support level during the trading session on Monday. The market breaking below the 23,000-rupee level is something worth noting due to the fact that the Nifty 50 had seen that as massively supportive in the past. In fact, we had a major gap in that area but gapping below there shows just how much fear had entered the market.
Traders continue to see a lot of concern around the overall oil supply for India as it gets an extraordinarily large amount of its oil through the Strait of Hormuz but there are also concerns about inflation around the world and whether or not trade will be crippled.
Corporate Resilience and External Shocks
The earnings per share in India is around 1,142 rupee while corporate India remains resilient the rising costs of capital and energy specifically crude oil poses a massive risk to margin for the next 2 quarters. The price to book ratio is now down to 3.14 making it a little bit more viable but the story in India remains somewhat fundamentally intact due to the 7.5% GDP growth but the market is undergoing a necessary valuation reset triggered by external shocks.
With this you should also keep in mind that the volatility index in India is at 26.87 which can be thought of as a bit of a fear gauge. It's a 3-year high that we are doing now and this is in direct response to the black swan environment created by the conflict in Iran and of course Brent crude crossing $110 barrel earlier.
With that I believe that rallies at this point in time will continue to be sold into.