NEW DELHI: After a turbulent Monday, domestic equity market is expected to remain under pressure
in the coming days as hostile global cues have taken the central stage.
The fears of the ongoing conflict between Israel and Hamas becoming a bigger regional crisis than it already is and the 10-year US treasuries hitting 5% for the first time since 2007 may keep the bulls on the back foot in the coming sessions, according to equity market analysts.
The two factors are important to the global equity market as they indicate higher crude oil prices and a prolonged period of high interest rates.
Falling for the fourth starting session, local benchmark indices- BSE Sensex and NSE Nifty – closed with a cut of about 1.3% each on Monday. The BSE tumbled 826 points to end at 64,572 levels, while the Nifty50 closed at 19,282, lower by 261 points.
The broader indices witnessed one of their biggest fall on Monday with both midcap and smallcap plummeting in the range of 2.9%-3.8%.
In the four sessions since last Wednesday, Sensex has tanked 1,925 points while broader Nifty50 has plunged by around 530 points. The markets were closed on Tuesday on the occasion of Dussehra.
“Benchmark indices witnessed severe pounding in the last hour trades (on Monday) as simmering geo-political tension in the Middle-East region triggered a wave of selling pressure and prompted investors to offload equity holdings. Investors are already worried about further interest rate hikes and inflation, and with the addition of the Israel-Hamas conflict, the uncertainty has increased further and leading to weak sentiment in global equities,” said Shrikant Chouhan, Head of Equity Research (Retail), Kotak Securities.
According to Chouhan, Nifty50 has formed a long bearish candle on daily charts which is indicating further weakness from the current levels. For day traders, 19400 would be the key resistance level, below which the index could slip till 19200-19175. On the other hand, above 19400 we could see a quick technical bounce back till 19450-19500, he said.
Ajit Mishra, SVP - Technical Research at Religare, said that the prevailing negativity is not going to subside anytime soon as weak global cues and recent sell-off in the broader indices may further deteriorate the sentiment.
“On the index front, we are now eyeing 19,200 as the next crucial support. Amid all, we reiterate our view to limit trades and prefer hedged positions,” said Mishra.
Among the local factors, investors would be keenly watching the September quarter numbers. In the coming days, Reliance Industries, Axis Bank, Tech Mahindra and Vodafone Idea among other companies will be reporting their Q2FY24 numbers.