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Are We Headed For A Recession?

Tale of the Tape 

Hey guys. Markets continued to crumble. But, look on the bright side, we only have one more day to go for the weekend. Yay? 🙃

Nifty and Sensex hit a fresh 52-week low in reaction to the US Federal Reserve policy outcome. More on it below. Midcaps (-2.3%) and Smallcaps (-3.4%) also witnessed deep cuts. 🔻

All sectors closed in the red. Real Estate (-2.8%), IT (-2.4%) and Autos (-2.4%) were amongst the top losers. 👎

The Nifty Metals Index hit a 14-month low today. Vedanta, JSPL, and Tata Steel tanked between 6%-8% each. Check out their charts below. 📉

Airline stocks got dumped after Aviation Turbine Fuel (ATF) prices hit a new all-time high of Rs Rs 1.41 lakh per kilolitre. InterGlobe Aviation and SpiceJet were down 5%-7% each. 💣  

Reliance Industries jumped +2% after a double upgrade by JP Morgan. The top US brokerage has an “overweight” rating on the stock and sees a 22% upside from current levels. The stock cooled off and ended 1% lower in line with overall market weakness. ✅

Tata Motors (-5%) expects FY23 Jaguar Land Rover sales to be impacted by back-to-back lockdowns in China. 🚗 

Dredging Corp (+1%) won a Rs 250 cr from Jawaharlal Nehru Port. 💰

Zomato (-5%) will partner with Jio-BP, Reliance‘s JV arm with British Petroleum, to electrify its delivery fleet. ⚡

Cryptos took a break from the recent beating. Bitcoin and Ethereum rose ~5%. Doge rallied +12%. 🔥

Here are the closing prints:

Nifty 15,360 -2.1%
Sensex 51,495 -2.0%
Bank Nifty 32,617 -2.2%

Warning Bells Go Off

The US Federal Reserve increased interest rates by a massive +0.75%, the largest rate hike since 1994!!! 🤯

To be clear, this was in-line with the market’s expectation after last week’s crazy high inflation numbers. So, why were investors left with a bloody nose? Chairman Jerome Powell did not rule out another 75 basis point rate hike at the next meeting. This view contrasts the last few months of commentary, which suggested a hike greater than 0.50% was off the table. ⛔

Experts see this as a major red flag and believe that such steep rate hikes may push the US economy into a recession by mid-2023. PS – during a recession, companies make fewer sales, employees lose their jobs, and the country’s overall economic output declines. Recession plus higher interest rates is spooking markets. This is bad news for India too. 🚨

The US is India’s largest trade partner. Indian exports to the US stood at $76.1 billion in FY22, +47% over the previous year. Several industries like IT, pharma, and chemicals earn a bulk of their revenue from the US. Any slowdown in the US would hurt business back home. That’s why they say – When America Sneezes, the World Catches Cold. 🤧


Metal stocks got smoked. The Nifty Metal Index dropped ~5%, to hit the lowest levels since April 2021. Fears of demand slowdown amidst a full-blown-out recession made investors nervous. Vedanta, JSPL, and Tata Steel tanked between 6%-8% each. Check out their (horrifying) charts below: 📉

Stocktwits Spotlight

Banking stocks may not be out of the woods yet. Trader Harneet’s top sell call from the pack is IndusInd Bank. The stock is already down 6% in just three days! Follow him for more awesome trade ideas and add $INDUSINDBK.NSE to your watchlist to track its performance. Here’s the link: