Why Are Markets Falling Today? Taking cues from overseas, equity markets tumbled for a sixth straight session on Thursday to the lowest level in four months. The BSE Sensex was trading 900 points lower, below 63,200. Nifty50 slipped below 18,900 for the first time since June 28.
The market capitalisation of all listed companies on BSE dropped by 5.78 lakh crore to Rs 303.44 lakh crore.
Among the Sensex stocks, Tech Mahindra and M&M fell around 2.3 per cent each. Tata Motors, Bajaj Finserv, Bajaj Finance, Asian Paints, and Tata Steel also opened lower. Barring Axis Bank, all constituents traded with cuts.
Global Cues
US stocks tumbled on Wednesday as Alphabet shares slid after disappointing earnings and as US Treasury yields rose, reviving fears that interest rates could stay higher for longer.
Broader Asian markets also fell, with China’s blue-chip index opening 0.51 per cent lower and Japan’s Nikkei declining over 2 per cent.
Crude Oil
Brent oil rose above $90 per barrel on Wednesday and was hovering around those levels in Asia hours on Thursday, after Israel Prime Minister Benjamin Netanyahu said the country was preparing for a ground invasion of Gaza. Higher oil prices are a negative for importers of the commodity like India.
Brent crude futures slid 21 cents, or 0.23 per cent, to $89.92 a barrel. US West Texas Intermediate (WTI) crude was at $85.31 a barrel, down 9 cents, or 0.11 per cent.
What Do Analysts Say?
Santosh Meena, Head of Research, Swastika Investmart Ltd., said: “The Indian market is currently undergoing a notable correction, and even the previously outperforming broader market segments are now witnessing profit-taking, which many had anticipated. This correction is considered a routine occurrence within the framework of a structural bull market, characterized by a significant retreat following a period of exuberance in midcap, smallcap, and SME sectors. This adjustment can be attributed, in part, to fluctuations in US bond yields and concerns surrounding the situation in Israel though these factors are largely seen as convenient excuses for the market’s pullback.”
“Nonetheless, the market appears to be entering a phase of consolidation in preparation for the pre-election rally. Historically, Indian markets tend to initiate their pre-election upswings approximately six months prior to the election outcome. As such, it’s reasonable to anticipate the beginning of a pre-election rally around the time of Diwali,” he added.
Vaishali Parekh, Vice President – Technical Research, Prabhudas Lilladher, said Nifty plunged heavily with profit booking witnessed and extended the losses from the previous session breaching below the crucial 19,200 zone during the intraday session further weakening the bias and sentiment overall.
Nifty Technicals
“In terms of market behavior, further correction could be expected, with the Nifty potentially testing its 200-day moving average (DMA) at around 18,700. This could present an attractive buying opportunity for investors looking to participate in the anticipated pre-election rally. It’s important for investors to remain composed and avoid panicking during these market fluctuations. Instead, they should be prepared with a list of high-quality stocks to capitalize on this dip,” Meena said.
As mentioned earlier, a breach below 19,200 zone shall trigger for intensified selling pressure with next major support maintained near 18,800-18,600 levels near the 200 period MA. The support for the day is seen at 18,950 levels while the resistance is seen at 19,250 levels, Parekh said.
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