Is HMPV the actual reason behind the fall in Nifty 50?
Nifty has fallen more than 370 points on 6th January. There are so many updates reaching the market amid the season of corporate results announcements that it becomes extremely difficult to gauge the exact reason behind extreme market behavior. The reason for this fall is not clear but popular media is attributing this fall to HMPV news. But can we say with confidence that HMPV is the reason behind Nifty 50 falling?
Lets first try to see the overall picture of the market.
Major losing indices: Below you can see the heatmap and the index wise fall on 6th January market. We can see that the major fall has happened in banks, energy and realty. PSU banks have shown the maximum fall in today's market. Banking stocks can get affected due to falling rupee for the past few weeks. Energy stocks might be getting affected due to the news related to Russia and Europe gas supply issue. Although Nifty FMCG is not among the top losing indices, ITC has fallen more than 8% that could have affected Nifty 50. ITC is in news due to the demerger of ITC hotels and hence cannot be attributed to HMPV.
Major strong indices: Although healthcare and pharma sectors are not in green, but the extent of fall is much lower than other sectors. Some stocks have in fact gained in today's market. This might be indication of the HMPV news is influencing the outlook on healthcare stocks. However, the analysis is inconclusive as there are healthcare stocks that suffered today. Biocon, Divislab, Laurus labs etc., have shown weakness today with fall below -2%.
Comparative Analysis: If we compare the Nifty 50 chart with the Nifty pharma charts during a similar situation during Covid, we can see that the fall in Pharma sector was delayed and muted as compared to Nifty.50 Moreover, the recovery in pharma was also faster than the overall market. Although comparing today's fall with the overall fall in Covid is a little farfetched, we cannot ignore that under similar situation pharma and healthcare sector are showing greater resistance than overall market. We can see that in the weekly timeframe Pharma sector has shown less bearishness and better recovery than Nifty 50.
Donald Trump Presidency: We can also take into account that the presidency is going to transferred in USA and all sorts of news are floating on tariffs. There are speculations to what can happen after Trump joins office. The response to these speculations is often delayed and in this case might coincide with HMPV news.
Conclusion :To attribute the bearishness in Nifty 50 to only HMPV alone would not be logical as there are so many variables at play. Falling Rupee, Russia -Ukraine war, corporate results etc., are all acting at once. Also, we have to acknowledge that the world has seem 3 waves on Covid and has successfully recovered. The subsequent Covid waves had significantly lesser impact on the market. This indicates that the HMPV news might have acted as catalyst in today's market but is not the sole reason behind the fall.
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