Selling pressure was once again seen in domestic equity benchmark indices Sensex and Nifty 50. Weak global cues and selling pressure in metal stocks halted their three-day rally. At a broader level, small-cap stocks are witnessing more selling pressure as compared to large-cap and mid-cap stocks. The Sensex fell 508.52 points to a low of 83,309.17, and the Nifty also slipped 164.4 points to 25,611.60. Most of the Sensex stocks are in the red, and only 17 Nifty stocks are in the green.
On Sensex, Trent, Tata Steel and SBI are the top gainers, while Indigo, Eternal and Asian Paints are most under pressure. At present, the Sensex is down 0.42% or 348.34 points at 83,469.35, and the Nifty is down 0.44% or 113.10 points at 25,662.90.
Seven reasons for market turmoil:
Selling pressure in metal stocks: Fall in global metal prices put pressure on metal stocks, leading to a decline of about 2% in the Nifty index. Earlier, it had gained about 6% in the last three trading days.
Profit Booking: This is also a major reason for the fall in the market. The finalization of the trade deal between India and the US led to massive gains, and as stocks rose sharply, investors started booking profits at higher levels, putting pressure on the market. VK Vijayakumar, Chief Investment Strategist, Geojit Investments, believes that Nifty may remain in the consolidation phase in the near future.
Weak Global Cues: Asian markets are in turmoil. South Korea’s KOSPI fell more than 3%, while Japan’s Nikkei 225, Hong Kong’s Hang Seng and Shanghai’s SSE Composite were also in the red, weighing on the Indian market. The situation in the US market was also not good, most of the indices closed at lower levels on Wednesday. The Nasdaq Composite dropped 1.54% and the S&P 500 fell 0.51%. However, the Dow Jones Industrial Average rose 0.53%.
Slow buying by foreign investors: On Wednesday, foreign investors bought more than sold, but buying was very light. Their net purchases stood at ₹29.79 crore, while Tuesday’s net purchases stood at ₹5,236.28 crore.
Caution before RBI monetary policy announcement: The meeting of the six-member Monetary Policy Committee of the Reserve Bank of India (RBI) began on Wednesday. The market is being cautious ahead of the decision of the committee headed by the RBI governor, whose decision is expected on Friday morning. According to a study by SBI, the Central Bank can maintain status quo on interest rates, which means there will be neither any cut nor any increase in the repo rate.
India VIX rises: India VIX, which measures near-term volatility, rose to 12.28. This surge reflects increased anxiety in the market, which typically increases volatility.
Sensex Expiry: Today is the weekly expiry of Sensex index derivative contracts, which is also contributing to the market volatility. Unwinding and rollover of positions usually leads to sharp fluctuations in equity benchmark indices.
technical outlook
According to a report by FundsIndia Equity Research Desk, Nifty 50 has formed a bullish candlestick pattern on the daily chart, but selling pressure can be seen at higher levels. India VIX is currently above 12, indicating increased near-term volatility. The short-term trend is still bearish, and a bullish trend can emerge only if it moves above 25,300 and sustains. Its 9-day simple moving average (SMA) currently stands at 25,185.
According to Shrikant Chauhan, Head of Equity Research, Kotak Securities, Nifty may face resistance at 25,800 and Sensex at 83,900, their respective 50-day Simple Moving Averages (SMA). If they break this resistance, Nifty may move towards 25,900-26,000 and Sensex towards 84,200-84,500. Talking about losses, Srikant suggests that if Nifty falls below 25,600 and Sensex falls below 83,100, they could go into the range of 25,500–25,350 and 82,800–82,500 respectively. Srikanth believes that since there is no clear direction in the market right now, focusing on these levels is the right strategy.