Mumbai, May 30 (IANS). Major indices of the Indian stock market witnessed a significant decline this week amid continued selling by foreign institutional investors (FIIs) and fears of rising food inflation due to forecast of a below normal monsoon.
Nifty declined 0.72 per cent during the week, while on the last trading day it slipped 1.50 per cent to close at 23,547.75. At the same time, Sensex fell by 1,092 points or 1.44 percent and closed at the level of 74,775. The Sensex recorded a decline of 0.85 percent in the entire week.
Large caps remained under pressure in the market, although the broader market showed strength and the midcap index briefly reached its all-time high.
An analyst said public sector banks (PSU banks) benefited from mark-to-market Treasury gains offset by the fall in bond yields. At the same time, the auto and metal sectors also got support due to the sharp fall in crude oil prices. On the other hand, FMCG, healthcare and consumer durables sectors witnessed decline as increased risk appetite of investors reduced the attractiveness of defensive stocks.
According to analysts, changes related to MSCI index rebalancing also saw major selling by institutional investors in the last trading session of the week.
Market experts believe that the macroeconomic environment looks better now compared to two weeks ago, but confirmation of policy clarity, normal monsoon and reduction in geopolitical tensions will be necessary for strong investment sentiment to form in major stocks.
There was a sharp decline in crude oil prices this week, mainly due to increased expectations regarding a possible diplomatic agreement between America and Iran. However, India Meteorological Department (IMD)’s below normal monsoon forecast limited the market’s positivity.
During this period, the Indian Rupee also strengthened somewhat, due to which the Reserve Bank of India (RBI) commented that the Rupee was still undervalued from its actual value.
According to analysts, foreign institutional investors (FIIs) made a net sale of about Rs 23,700 crore during the week.
In contrast to the benchmark indices, the broader market witnessed strength. The Nifty Midcap 100 index gained 0.54 per cent during the week, while the Nifty Smallcap 100 index rose 1.02 per cent.
Market participants believe that 24,000-24,100 level will remain a strong resistance zone for Nifty 50, while the range of 23,300-23,000 will remain an important support zone.
In Bank Nifty, the level of 54,600-54,800 is considered to be the nearest resistance, while the level of 54,200-54,000 will act as the immediate support zone.
Investors are now keeping an eye on the upcoming monetary policy of the Reserve Bank of India, India’s GDP data, Purchasing Managers’ Index (PMI) and Industrial Production Index (IIP) data, which can play an important role in deciding the next direction of the market.
–IANS
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