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Published: Mar 01, 2023
Updated: Mar 01, 2023

Sensex Continues to Fall for Seventh Straight Session Due to Rising US Dollar and Inflation Concerns

The Indian stock market has been experiencing a sell-off for the last seven days, with the BSE Sensex dropping by over 2,000 points or 3.3% to reach around 59,288 levels from around 61,319 levels. The dip in the Sensex is attributed to the rising US dollar rate, which is prompting investors to move their money from equity to the forex market, particularly in the US dollar. According to experts, the US dollar index may hit 107 in the near term, leading to further falls in the Sensex to levels ranging from 58,400 to 57,500 in the short term.

The main reason for the US dollar's strength is the rising inflation concern in the US after stronger-than-expected US economic data in recent weeks. This has caused concern among US Fed officials who are dropping hints of a possible 25 bps increase in the US Fed interest rates in the upcoming three US Fed meetings.

Selling in Auto and Realty Stocks on the Rise

As the market is expected to remain in the "sell on rise" mode until the next US Fed meeting scheduled for 15th to 16th March 2023, the rising interest rates are putting pressure on auto and realty stocks. Hence, investors are advised to maintain a "sell on rise" strategy on auto and realty stocks until the outcome of the US Fed meeting is announced.

Buy IT and Metal Stocks on Dips

The falling rupee may provide a premium to IT and metal companies in the near term, and hence there may be some safe buying in these stocks after every significant fall in the markets. The US Fed meeting is around a fortnight away, and the Dollar Index may breach the 107 resistance and go up to 110 levels in the near term. Indian National Rupee (INR) may go up to 83.50 levels against the US dollar, according to experts.

Investors are advised to take advantage of the fall in the rupee against the US dollar and consider buying major IT and metal stocks after every significant fall in the markets.

Rising inflation and dollar driving the dip

The dip in the Sensex is primarily due to the rising US dollar rate and the inflation concern in the US. The sell-off in the market is expected to continue until the next US Fed meeting, leading to pressure on auto and realty stocks. However, the falling rupee may provide a premium to IT and metal companies, leading to safe buying opportunities for investors in these stocks. Investors should consider consulting with certified experts before making any investment decisions