NEW DELHI: India’s equity market reeled under heavy selling pressure on Wednesday as a host of negative global cues continued to jitter investors' sentiments. The Sensex nosedived below the 64,000 mark to hit a low of 63,912 while the broader Nifty50 hit a low of 19,074 during the intraday trading hour. As of 1:50 PM, the two indexes were trading with a cut of about 1%.
The fresh fall of Wednesday comes after the local benchmarks- BSE Sensex and NSE Nifty – closed with a cut of about 1.3% each on Monday. In the last 5 sessions, the two indexes have plummeted by more than 3.50%.
Aditya Gaggar, Director of Progressive Shares said that the markets are reacting to the uncertainty that persists through the geopolitical heat-up led by the Middle East (Israel-Hamas conflict).
“Along with these, the other factors the rising bond yield and dollar index as well as crude oil price fluctuations supported by the technical confirmations of the Head and shoulder breakdown in Nifty and double top breakdown in Bank Nifty. Cumulatively, this has led to a cautious investor fraternity; which is the right approach, till some clarity emerges on the global front,” added Gaggar.
V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services, said, “The uncertainties associated with the Israel-Hamas conflict will continue to weigh on markets in the near term. Positive news like the decline in the US bond yields and weakening crude can help the market to revive but it may not be sustained given the uncertainty surrounding the West Asian conflict. Investors may opt for a cautious approach to the market till some clarity emerges on the geopolitical situation. An important feature of the near-term market is the weakness of the broader market. Since the valuations in mid and small-cap space is higher than those of large caps, this weakness is likely to persist. Safety is now in large caps, particularly in banking majors which are fairly valued.”
In the Nifty 50 pack, HDFC Life, NTPC, Cipla, Apollo Hospital, ICICI Bank, and Bharti Airtel were the major laggards. Metal stocks witnessed strong buying with JSW Steel and Tata Steel leading the rally.
Pawan Bharaddia, Co-founder of Equitree, said that the market was waiting for an opportunity for profit booking - the recent hike in bond yields to 5%, increased geopolitical tensions risking a flare-up in the Middle East as well and early in-line corporate results have all just provided the platform for much-awaited correction.
“We don’t think this is leading to any panic or deep selling. However, from hereon market is likely to become more stock-specific rather than a broad-based bull phase. We may see consolidation for a month or so and then Q3 earnings should take over the sentiments,” said Bharaddia.
Santosh Meena, Head of Research, Swastika Investmart, said that the Indian market is currently undergoing a notable correction, and even the previously outperforming broader market segments are now witnessing profit-taking, which many had anticipated.
“This correction is considered a routine occurrence within the framework of a structural bull market, characterized by a significant retreat following a period of exuberance in midcap, smallcap, and SME sectors. This adjustment can be attributed, in part, to fluctuations in US bond yields and concerns surrounding the situation in Iraq, though these factors are largely seen as convenient excuses for the market's pullback,” said Meena.
“Nonetheless, the market appears to be entering a phase of consolidation in preparation for the pre-election rally. Historically, Indian markets tend to initiate their pre-election upswings approximately six months prior to the election outcome. As such, it's reasonable to anticipate the beginning of a pre-election rally around the time of Diwali. In terms of market behaviour, further correction could be expected, with the Nifty potentially testing its 200-day moving average (DMA) at around 18,800. This could present an attractive buying opportunity for investors looking to participate in the anticipated pre-election rally. It's important for investors to remain composed and avoid panicking during these market fluctuations. Instead, they should be prepared with a list of high-quality stocks to capitalize on this dip,” added Meena.