Indian equity markets witness third biggest fall of the year

Asia's Tech News Daily

#BSE Sensex, #Market Edge, #Nifty, #stock market fall

The markets witnessed intense selling pressure today from FIIs which the DIIs were not able to match with their purchases.

It was a ‘Black Friday’ in its true sense for the Indian investors on November 25 as they lost Rs 7 lakh crore of their wealth in a single day. The market declined nearly 3% with BSE Sensex falling by 1,687.9 points and Nifty shedding 509.8 points.

This was the third biggest single-day fall of the year 2021. The markets were witness to their worst fall of this year on February 26, when the Sensex had lost 1,939.32 points.

On April 12, Sensex had lost 1,707.94 points to register the second biggest fall of the year. Today’s decline, however, was the steepest since the markets touched record highs on October 19, 2021, when Sensex kissed 62,245 and Nifty reached 18,604.

The markets have been in a correction mode since they touched their peaks as various global factors are inhibiting any further rise.

The domestic market has corrected nearly 9% from its peak as weak global cues, persistent selling by FIIs, and premium valuation has made investors cautious.

“Going ahead market is likely to continue being under pressure till clarity emerges over how dangerous the new COVID variant can be”, said Siddhartha Khemka, Head – Retail Research at Motilal Oswal Financial Services Ltd (MOFSL).

“Already market is precarious over timing of fed raising the interest rate. With the emergence of new, highly mutated Covid-19 variant and EU announcing the temporary ban of flights from South Africa along with few EU countries already under full lockdown scenario, market sentiments have taken a big blow”, Khemka added.

The markets witnessed intense selling pressure today from FIIs which the DIIs were not able to match with their purchases.

The rising inflation is inducing the Fed to taper bond purchases and implement an early hike in interest rates even before it concludes the tapering of bond purchase. These developments have strengthened the US dollar to a certain extent, and also prompted exit from emerging markets by FPIs.

“As COVID risks rise, the dollar continues to strengthen, foreign investors started moving their money back to the US”, commented Mohit Nigam, Head – PMS at Hem Securities.

The Volatility index was up by 24.85% and except Nifty Pharma and Nifty Healthcare, all other sectoral indices ended in the red. Top gainers included Cipla – Rs 965.0 (+7.23%), Dr. Reddy’s – Rs 4,750.0 (+3.45%) and Divi’s Labs – Rs 4,940.0 (+2.92%) while JSW Steel – Rs 630.0 (-7.48%), Tata Motors – Rs 459.4 (-6.77%) and Hindalco – Rs 417.7 (-6.57%) were the biggest losers.

Technical View

“Technically, Nifty is continuing its southward journey following the breakdown of a bearish head and shoulder formation and it has also slipped below its critical support of 100-DMA of 17,088 with bearish Marubozu candlestick formation that has opened the door for further weakness towards 16,700/16,400 levels”, said Parth Nyati, Founder, Tradingo.

On the upside, now 17,100 will act as an immediate hurdle while 17,350-17,400 will be the next critical resistance zone, Nyati added.

Giving technical views on Bank Nifty, Nyati suggested that, Bank Nifty is underperforming and witnessing a vertical fall. It is trading near its 200-DMA which is currently placed at 35,700 level and is a very crucial level. Below this, it is vulnerable for further weakness towards 35,000/34,000 levels. On the upside, 37,000 will act as a strong resistance.

In such a scenario, Khemka of Motilal Oswal suggests, “it is wise to grab the opportunity and invest in stocks that are backed by strong fundamentals and sound management”. Blue-chip stocks which act as safe havens for investors provide good entry points at lower levels to invest from long-term perspective. Defensive sector stocks can also be looked as a buying option, the market expert added.

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