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The Economic Times

Nifty down 1.6% in dollar terms since Jan 1 as blue chips correct

After being the second-best performer in the last quarter of 2018, the Indian market is now one of the only two to be in the negative returns zone since the beginning of 2019, along with the UK (due to the uncertainty surrounding Brexit), in the list of top 15 global markets. In dollar terms, the Nifty has lost 1.6 per cent in the year-to-date (YTD) period. In domestic currency terms, the index is up 0.4 per cent.

However, India remains an outperformer over a slightly longer period of three months – up 8 per cent, in the period of liquidity crisis and bounce-back in the rupee against the US dollar. Market experts view the recent correction as temporary, a result of profit booking, and expect the outperformance to continue in coming days. The Nifty corrected nearly 15 per cent in the first-nine months of 2018, but has recovered sharply since then.

The recent performance was dragged mainly by the correction in some of the heavyweight stocks such as L&T, HUL and Maruti Suzuki. Since January beginning, L&T’s shares have corrected 10 per cent (in USD and 8 per cent in INR) in anticipation of rejection of its buyback offer by Sebi . Shares of HUL and Maruti are down 4 per cent and 3 per cent, respectively, in the dollar terms due to lower than anticipated numbers and expensive valuations.

This was offset by strong performance by Infosys – up 8 per cent (in USD terms and 10 per cent in INR) since January 1 on buyback announcement, and Reliance Industries – up 4.4 per cent (in USD and 6 per cent in INR) post its strong December quarter results.

The fall in dollar adjusted Nifty was also the result of a 2 per cent correction in rupee against the US dollar.

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