The Indian benchmark indices opened in deep red and lost more than one percent each. The Sensex tumbled more than 900 points while Nifty fell below its 200-DMA leaving investors poorer by Rs 3 lakh crore. All of Nifty’s sector indices were in the red on Friday morning.
Also on Thursday, Sensex had lost about 550 points, meaning the 30-stock index has lost 1,450 pints in two consecutive sessions.
Why is the stock market falling today?
Weak global signals
In Asia, markets in Hong Kong, Shanghai, Tokyo and Seoul fell on losses in US equities. Hong Kong’s Hang Seng fell 2.45 percent, South Korea’s Kospi 1.21 percent, Shanghai 1.15 percent and Japan’s Nikkei 1.36 percent.
In the US, the S&P 500 plunged 1.8 percent, the Dow Jones Industrial Average fell 1.7 percent and the Nasdaq composite fell 2.1 percent as investors remain concerned about the prospect of more aggressive action from the Federal Reserve to fight inflation with higher interest rates, PTI reported.
“India’s markets have taken a significant hit due to weak global signals. The US market was under pressure from the drop in shares of SVB bank and cryptocurrency financier Silver Capital, particularly in stocks related to banking and finance. We lack direction and are currently under selling pressure at higher levels due to the extremely volatile global signals over a long period of time,” said Santosh Meena, Head of Research, Swastika Investmart.
“The most recent number is more specific to the US and there is only a sentimental impact on global markets. Nevertheless, the market may remain volatile ahead of the US jobs data released today and the US CPI data released next week,” he added.
SVB Shares Collapse 60%
Shares of US bank SVB Financial Group, which invests in early-stage startups, plunged 60%, wiping out more than $80 billion in market cap amid financial stability concerns. While it is a problem specific to the US, the defeat has a spillover effect not just on other Wall Street stocks, but on the entire world.
FIIs become net sellers
According to NSE data, the buy value of foreign institutional investors (FIIs) was Rs 7,570.52 crore in Indian stocks on Thursday, while the sell value was Rs 8,132.30 crore. Taking this into account, the total FII outflow during the day was Rs 561.78 crore.
fueled fear
Markets are currently pricing in a 78 percent probability of a 50 basis points (bps) rate hike by the US Fed at its March 21-22 meeting. Investors awaited Friday’s February employment data that could help decide how big of a rate hike the US Fed will impose at its next meeting in two weeks.
Rupee
The rupee depreciated by 8 paise to 82.14 against the US dollar today. The dollar index, which measures the greenback’s strength against a basket of six currencies, traded above 105.
Handy technical
On the daily chart, the Nifty developed a bearish engulfing pattern on Thursday and further bearishness will be confirmed as the Nifty closes in the red today. Nifty’s crucial levels to watch are support at 17,350 and the 200 EMA at 17,684, said Ameya Ranadive, Equity Research Analyst at Choice Broking.
Bank handy
Parth Nyati, founder of Tradingo, said: “Banknifty is facing resistance at the 50-DMA, placed around 41,650. It is trading below the 20-DMA of 40,950, with 40,450 being the next level of support. 40,000 is a critical demand zone for any major weakness.”
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