Worries about global politics and trade are pulling the Nifty 50 down. Experts say the market could drop further low.
If technical analysts are to be believed, the index has more room for a slide down to 72,000 levels in the worst-case scenario, wiping out all the gains made in 2024 so far.
Analysts remain bullish on the road ahead for the equity markets, but warn against volatility on account of domestic and global cues. The upcoming Lok Sabha elections back home and the interest rate trajectory of the US Federal Reserve, they said, will be the two most important factors that the markets will keep a tab on. That apart, the valuation of the Indian markets, they feel, will also be eyed in context of how global peers are performing.
'We are expecting lower levels in the week beginning March 1.'
The NSE Nifty 50 has slipped 3.4 per cent, or 764 points, in the last five trading sessions, after registering a fresh all-time high at 22,794.70 on Friday, May 03, 2024. In the process, the Nifty 50 index is seen quoting close to its 100-DMA (Daily Moving Average) of 21,970 for the second time in less than a month. Earlier on April 19, 2024, the Nifty 50 had tested the 100-DMA support, and then staged a smart rally of 4.7 per cent, or 1,017 points, to hit the new peak of 22,794.70.
Tracking losses in the broader market that has seen the Nifty Smallcap 250 index and the Nifty Midcap 100 indices slip 9 per cent 6.1 per cent in the last three sessions, the frontline Nifty 50 index has remained resilient and registered a fall of 2.2 per cent during this period. Going ahead, can the nervousness in the mid- and small-cap universe spread to the large-cap peers? Most analysts do not think so. They expect a minor dip and a sharp recovery as investors flock to the large-caps in search of safety and value buying as the mid-and small-caps falter.
The global turmoil in the banking sector has made analysts cautious, who advise that investors stay away from stocks of this sector till the overall sentiment improves. The recent trouble for the banking sector started with the collapse of US-based Silicon Valley Bank (SVB), Silvergate Capital and Signature Bank. On its part, Moody's Investors Service has also cut its outlook for the US banking system to 'negative' from 'stable', citing the run on deposits at these three banks that led to the collapse of these banking majors in less than a week.
Equity benchmark indices Sensex and Nifty hit their fresh record levels on Thursday after lower inflation numbers raised hopes of an interest rate cut by the RBI. Besides, heavy buying in capital goods, consumer durable and industrial stocks also helped the indices, traders said. Retail inflation continued its downward slide to reach a one-year low of 4.75 per cent in May due to a marginal decline of prices in the food basket and remained within the Reserve Bank's comfort zone of below 6 per cent, according to government data released on Wednesday.
The Sensex finished above the psychologically key 60,000-mark while the Nifty surged past the 18,000-level on Monday on across-the-board buying amid a mixed trend overseas. A depreciating rupee and concerns over the US Federal Reserve hiking rates later this week failed to quell investors' appetite for stocks, traders said. The 30-share BSE Sensex rallied 786.74 points or 1.31 per cent to settle at 60,746.59.
Covering-up of short positions by speculators ahead of September month expiry in the derivatives segment on Thursday also helped the market stage a smart rally.
According to experts, the Nifty has continued to form lower top-lower bottom formations, a trend seen in the last five weeks, and witnessed sharp selling towards 9,700 zones.
BSE mid-cap index slipped 0.6% at 6,266. Small-cap index held on to gains and traded unchanged at 6,034.
Market benchmarks gave up intra-day gains to close in the red for the sixth session on the trot on Friday, capping a bruising week which saw a massive dash for safety amid rate hikes by global central banks and fears of slowing growth.
Tata Motors (down 1.7%) was the top loser on Sensex and Nifty, while Lupin (1.6%) gained the most.
Banks stocks continued to trade weak along with FMCG major ITC.
Sliding for the fifth straight session, the rupee fell 3 paise to close at a fresh lifetime low of 79.06 against the US dollar on Thursday amid a strong greenback overseas and unrelenting foreign fund outflows. At the interbank forex market, the local unit opened at 78.92 against the greenback and witnessed an intra-day high of 78.90 and a low of 79.07. It finally settled at 79.06, down 3 paise over its previous close of 79.03.
Out of 30 Sensex shares, 19 ended lower while 11 gained
VIX is meant to indicate investors' perception of the annual market volatility over the next 30 calendar days. The higher the value, the higher is the expected volatility and vice versa. VIX touched its historical peak of 85.13 on November 17, 2008, in the aftermath of the collapse of Lehman Brothers. In the past five years, it has stayed below 30.
Experts find it difficult to predict a bottom for the bourses.
The NSE Nifty ended at 2,780, down 23 points. The market breadth was fairly negative - out of 2,566 stocks traded, 1,453 declined, 1,006 advanced and the rest were unchanged on Thursday.
The markets tumbled from higher levels in late morning deals and remained weak thereafter.
The Sensex began Samvat 2,061 with a huge positive gap of 31 points at 5,985.
Heavy selling pressure towards the end saw the Sensex slide to a low of 9714, and closed with a loss of 101 points at 9743.
The Sensex opened with a positive gap of 12 points at 8,389, and touched a high of 8,396 in early deals.
Mirroring the gains at Wall Steet and strong Asian markets, the Sensex opened with a positive gap of 11 points at 5,263. It moved up a tad to touch a high of 5,269, before slipping into negative zone owing to profit-taking.
There's sustained demand for the American currency from importers and banks
Coal India fell the most by 2.58 per cent among Sensex scrips, dragging the index into the negative zone.
It, however, was a record-smashing week for both the indices, which scaled their lifetime highs.
Top gainers include Yes Bank, HUL, Vedanta, NTPC, Bharti Airtel, Adani Ports, PowerGrid and Tata Motors, rising up to 5 per cent.
EM asset classes could rally if the pace of US Federal Reserve rate increases moderates.
The NSE 50-share Nifty also closed higher by 61.60 points, or 0.59 per cent, at 10,504.80 after shuttling between 10,513 and 10,441.45.
Other than ITC, other laggards include PowerGrid, Infosys, M&M, NTPC, SBI, HDFC, Kotak Bank, HDFC Bank, TCS, Hero MotoCorp, Coal India, ONGC, RIL, Asian Paint, IndusInd Bank, ICICI Bank, Maruti Suzuki, Bajaj Auto, Tata Motors, Bharti Airtel and Axis Bank.
The dollar index, which tracks the world's reserve currency against a basket of its peers, is down 0.16 per cent at 97.58.
OIL, IOC, HPCL, BPCL slipped between 0.1-1.5% each while the oil producing companies such as ONGC (0.1%), RIL (1.5%), GAIL(2.6%) also edged lower.
Markets could slide again owing to conditions in Europe and the US.
2018 has been a disappointing and highly volatile year for equity investors.
Between Friday's and Monday's close: Yields on 10-year bonds up 6 basis points, rupee slides 13 paise against dollar, Sensex ends flat
Sun Pharma was the top gainer after SPARC received Sebi nod to raise up to Rs.250 crore through a rights issue
This is the highest closing level since May 11, 2016 when the rupee had finished at 66.56
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