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Indian stocks set for first annual decline in seven years: Report

The markets are under the firm grip of  Bears for sometime now.The situation does not seem to be improving. The inflation, Rising interest rates, Russian bombings, FIIs after green pastures….all make the index fall like a pack of cards.So as investors let us all wait and watch the bottom of the pyramid to be visible!

Most analysts warned the negative outlook was largely due to rising interest rates. 

India’s benchmark BSE Sensex has fallen nearly 7% so far this year and around 12% since this year’s high of India’s equity markets will mark their first annual decline in seven years in 2022 as higher interest rates and weakening growth prospects reduce the chances of a quick rebound from this year’s already sharp drop, a Reuters poll showed.

Soaring inflation in India and around the world, with frayed supply chains made worse by Russia’s invasion of Ukraine, has pushed most central banks to begin raising interest rates, triggering hefty outflows from risky assets.

India’s benchmark BSE Sensex has fallen nearly 7% so far this year and around 12% since this year’s high of 61,475.15 on Jan. 18, a level the index was not expected to reclaim anytime soon.

That performance is still better than that of the MSCI all-country world index , which is down more than 16% for the year and earlier this month came dangerously close to a bear market, defined as a loss of 20% or more.

The Reuters poll of 30 equity strategists, which was conducted May 13-24, forecast the BSE Sensex to recoup less than half of its recent losses and gain only 3.2% to 56,000 by the end of 2022 from Monday’s close of 54,288.61.

If realised, the annual decline of about 4% would be its first yearly loss since 2015.

“There are no clear signs of volatility abating on Indian markets in the near term,” said Rajat Agarwal, Asia equity strategist at Societe Generale.

“At one end are the headwinds arising from expectations of further rises in interest rates, and at the other end, the earnings growth momentum is slowing.”While the BSE Sensex was forecast to recover losses ratcheted up so far and hit 60,000 by the end of 2023, analysts predicted plenty of volatility in the short run.

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