Sensex sinks; midcap, smallcap stocks enter bear territory 

Market


Indian stock markets nosedived today while rupee plunged to a record low as rising inflation worries continued to dent investor sentiment for global equities. The S&P BSE Sensex fell 1150 points to 52,930 while NSE Nifty 50 slumped 2.2% to 15,808. The Sensex has slumped over 4,000 points this month amid a global selloff amid surging inflation in the US, which could lead to faster-than-expected rate hikes by the US Federal Reserve.

In India, the gauges of small- and mid-sized companies fell for a ninth session to extend their losses to 20% from their records, entering so-called bear territory. The S&P BSE SmallCap Index dropped 2%, while the midcap gauge fell 2.2% on Thursday. Breadth of the market remained negative with 1:4 advance decline ratio at NSE. This was the 11th straight session for the breadth to remain in negative territory.

Foreign investors have been selling stocks in India since September, taking out nearly $24 billion.

“Inflation continues to be a major concern for the markets. Weakening economic growth outlook, prolonged Russia-Ukraine War, volatility in commodity prices, continued FIIs selling and rising bond yields have dented investors’ sentiments. Nifty has corrected by 15% from its 52-week high,” said Siddhartha Khemka, Head – Retail Research, Motilal Oswal Financial Services Ltd..

“Rupee plunged to all time low of 77.63 on the back of RBI’s aggressive stance to curb inflation and strength in US Dollar. The Dollar Index touched a 20 year high of 104.5. Nifty is now retesting its March low of 15,671 (today’s low is 15735) and a close below this can further add to downside in the market. While overall weakness is expected to continue, markets are now in oversold territory after witnessing a sharp decline in the last few trading sessions. India VIX spiked by 6% to 25 zones – 7-week high, indicating that uncertainty may continue in the market for some more time,” he added. 

The short term trend of Nifty continues to be negative and there is a possibility of further weakness down to 15670, says Nagaraj Shetti, Technical Research Analyst, HDFC Securities. “But there is a higher possibility of Nifty forming lower bottom reversal around 15500 levels. Confirmation of reversal pattern could open upside bounce in the market. Present weakness signal a type of selling climax and normally such extreme selling participations are part of important bottom reversal,” he said. 

Ajit Mishra, VP – Research, Religare Broking, said that a breakdown below 15,650 would pave the way for 15,400. “Participants should align positions according to the trend and focus more on position management,” he added.

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