Why are the markets falling today? Based on signals from abroad, stock markets plunged to the lowest level in four months for the sixth time in a row on Thursday. The BSE Sensex was trading 900 points lower at below 63,200. Nifty50 fell below 18,900 for the first time since June 28.
The market capitalization of all listed companies on BSE fell by Rs 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. With the exception of Axis Bank, all voters acted with austerity.
Global signals
U.S. stocks tumbled on Wednesday as Alphabet shares fell on disappointing earnings and as U.S. Treasury yields rose, reviving fears that rates could stay higher for longer.
Broader Asian markets also fell, with China’s blue chip index opening 0.51 percent lower and Japan’s Nikkei down more than 2 percent.
Crude oil
Brent crude rose above $90 a barrel on Wednesday and hovered around that level in Asia on Thursday, after Israeli Prime Minister Benjamin Netanyahu said the country was preparing for a ground invasion of Gaza. Higher oil prices are negative for importers of the commodity such as India.
Brent crude futures fell 21 cents, or 0.23 percent, to $89.92 a barrel. US West Texas Intermediate (WTI) crude traded at $85.31 per barrel, down 9 cents or 0.11 percent.
What do analysts say?
Santosh Meena, head of research at Swastika Investmart Ltd., said: “The Indian market is currently undergoing a remarkable correction, and even the previously better-performing broader market segments are now witnessing profit-taking, which many had anticipated. This correction is considered a routine event in the context of a structural bull market, which is characterized by a significant pullback after a period of exuberance in the mid-cap, small-cap and SME sectors. This adjustment can be partly attributed to swings in US bond yields and concerns about the situation in Israel, although these factors are largely seen as convenient excuses for the market’s decline.”
“Nonetheless, the market appears to be entering a phase of consolidation in preparation for the election rally. Historically, Indian markets have tended to start their pre-election rally about six months before the election results. As such, it is reasonable to anticipate the start of an election rally around the time of Diwali,” he added.
Vaishali Parekh, Vice President – Technical Research, Prabhudas Lilladher, said that Nifty plummeted heavily witnessing the profit booking and the losses from the previous session came below the crucial 19,200 zone during the intraday session and the overall bias and further weakened sentiment.
Useful technical details
“As far as market behavior is concerned, a further correction could be expected with the Nifty possibly testing its 200-day moving average (DMA) at around 18,700. This could provide an attractive buying opportunity for investors looking to participate in the expected pre-election rally. It is important that investors remain calm and avoid panic during these market swings. Instead, they should be prepared with a list of high-quality stocks to benefit from this dip,” said Meena.
As mentioned earlier, a break below the 19,200 zone will lead to increased selling pressure, with the next major support remaining around the 18,800-18,600 levels around the 200 MA. The support for the day is seen at 18,950 levels while the resistance is seen at 19,250 levels, Parekh said.
Disclaimer:Disclaimer: The views and investment tips expressed by experts in this News18.com report are their own and not of the website or its management. Users are advised to contact certified experts before making any investment decisions.