Why Sensex, Nifty 50 are nosediving this week — explained with five reasons
Stock market today: Key benchmark indices extended its slide for third straight session during morning deals on Thursday. BSE Sensex today opened lower at 66,608 and went on to hit intraday low of 66,219 levels, logging near 0.87 per cent dip during Thursday deals. However, if we look at this week’s performance, Sensex has fallen from 67,838 to 66,219 levels in this truncated week, losing over 1,600 points in last three sessions.
Like Sensex, other key benchmarket indices Nifty 50 and Bank Nifty have also witnessed selling pressure in this week. Nifty has lost over 450 points in last three sessions whereas Bank Nifty has lost around 1,200 points in this time.
According to stock market experts, FIIs’ selling, US dollar gaining strength, US Fed’s hawkish rate pause, rising crude oil prices, etc. have together contributed profit booking in Indian stock market as majority of the Indian indices were either at record high or near to its life-time high. So, profit booking triggered as the equity market hasd a participatory rally for last few sessions and there was limited upside possibility for the Indian indices.
Speaking on the reasons that led to slide in the Indian stock market, especially Sensex, Nifty 50 and Bank Nifty, Prashanth Tapse, Senior Vice President — Research at Mehta Equities said, “Due to rise in crude oil prices in international market in recent sessions, market was expecting inflation pressure on the US Fed leading to rise in speculation of a hawkish US Fed stance, which turned true in its meeting on Wednesday. Hence, expecting rise in the US dollar, FIIs started fishing out money from assets like equities, gold, etc.”
Five triggers that dragged Indian stock market
Prashanth Tapse said that Indian stock market indices were already at record and and it was waiting for a profit booking trigger that happened with combination of five factors — rise in crude oil price, US dollar gaining strength against major global currencies, renewal of inflation fear, US Fed hawkish stance and FIIs’ sell off trigger.
FIIs have remained net sellers in this week as they sold out shares worth ₹1,236.51 crore on Monday and ₹3,110.69 crore on Wednesday sessions respectively.
On why Sensex, Nifty and Bank Nifty is under pressure after US Fed meeting outcome, Amit Sajeja, Vice President — Research at Motilal Oswal said, “US Fed decided to keep the interest rate unchanged but it raised median rates from 4.60 per cent to 5.10 per cent, which means chances of US Fed rate cut in short to mediuerm is minimal. This has put the market buzzing that there can be further rate hike in next year. This has put US dollar in uptrend while other assets like gold, gold ETF, equities, etc. under pressure.”
Important levels for Nifty, Sensex, Bank Nifty
On major support levels that one should keep in mind, Sumeet Bagadia, Executive Director at Choice Broking said, “Sensex today has crucial support placed at 65,700 to 65,500 levels and it may go up to 68,000 in case of trend reversal. Similarly, Nifty today has major support placed at 19,600 to 19,500 levels and it has hurdle placed at 20,300 levels.”
Advising ‘buy on dips’ strategy to Indian stock investors, Sumeet Bagadia said that Bank Nifty chart suggests that it has major support placed at 44,500 to 44,300 levels whereas it may go up to 46,000 to 46,500 in case of stock market’s rebound in near term.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before taking any investment decisions.
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Updated: 21 Sep 2023, 11:52 AM IST
