These chemical, pharma, infrastructure, bank stocks fell more than 15% in the last one month

The ongoing energy crisis and production disruption in China have impacted the Indian chemical industry as China is one of the biggest chemical producers in the world. “Due to the power crisis in China and resultant rationing of power for [the] industrial sector, the chemical industry has also been impacted in the near term. China being a major chemical producer and high import dependence on China for several chemical segments, there has been some impact on the domestic chemical sector also,” said a report by credit rating agency ICRA in November.

Since China is a major source of imports for several key chemicals, any disruption in imports of petrochemicals, dyes and pigments and agro-chemicals leads to volatility in prices, and disruption in raw material availability for the chemical sector. Besides, high freight costs have also resulted in higher costs for several imported chemicals.

As the market is witnessing a downward trend and most of the stocks witnessed volatility, banking stocks were not left behind either.

As the market wiped out 1,500 points in a single day (November 22), all the banking stocks were trading lower with Axis Bank and IndusInd being the top losers in the sector. Fears of rising inflation globally and domestically is leading to investors taking out money from emerging markets like India.

"Going forward, rising inflationary pressure will continue to haunt global markets as fears of rate hikes will pump out liquidity from emerging markets like India," said Vinod Nair, head of research at Geojit Financial Services.

Several pharmaceutical stocks have been on a downward trend for a long time due to high raw material prices and low demand in some products. Nifty Pharma has gained just 1.87% in 2021 so far.

Rise in raw material prices, disruption in the supply chain due to unexpected power outages in China, a sudden spike in the coal prices, elevated freight costs due to shortage of shipping containers and one-off employee expenses hurt earnings of companies like Aarti Drugs and shares of the pharma company.

Another sector hit in the last one month is financial services companies. One of the reasons for a fall in Angel One’s stock is the huge rally in shares in 2021.

“Some correction is expected as investors are selling PSU and some other stocks to make way for LIC, which is expected to be launched around February. This can be one of the triggers for the fall. Another 5% correction could happen in the next 15-20 days due to global weak sentiment,” said Abhishek Jain, chief market strategist at BP Equities.

Shares of Spandana Sphoorty Financial have been falling due to tussle amongst management and promoters. Managing Director Padmaja G Reddy had resigned from the microfinance lender following disagreement with private equity investor Kedaara Capital.

With market correction happening across the board, some of the well known stocks like Dilip Buildcon also witnessed huge selling as investors were betting safe by shifting money from equities.

“The market momentum has weakened recently and the market appears to be heading for a risk-off mode. Lofty valuations, downgrading of India by many foreign brokerages, and sustained selling by FIIs [foreign institutional investors] have contributed to this weakness in the market," reportedly said VK Vijayakumar, chief investment strategist at Geojit Financial Services.

Most of the fast moving consumer goods (FMCG) stocks were trading low as there has been an industry trend about sharp rise in input cost and high freight costs.

“While we expect headline revenue growth to sustain (price mix will improve), rising input costs-led price hikes could act as a spoilsport, impacting volume growth (for FMCG players),” said analysts at HDFC Securities in a report.