BackSensex slumps over 2,000 points in 5 days. Why Indian markets are falling
Resurgence of Covid-19 has led to fears of the momentum in the economy slowing down, say analysts
PremiumIndian markets fell sharply today, extending the selloff to the fifth day. The NSE Nifty 50 index shed 1.11% to end at 14,557.85, while the S&P BSE Sensex slumped nearly 600 points to close at 49,216.52. Both the indexes had advanced roughly 1% each earlier in the session amid broad-based gains, as global sentiment was boosted after the US Federal Reserve pledged to keep its benchmark overnight interest rate near zero. In this current leg of selloff, Sensex has lost over 2,000 points in five days.
Rising COVID-19 cases domestically, a surge in US bond yields, FTSE rebalancing, outflows from foreign investors are some of the factors that have been attributed for the selloff. India today reported its highest rise in daily COVID-19 cases in more than three months.
In domestic trading, selling was broad based, with almost all major sectors closing in the red. Information technology stocks were the biggest losers, with the Nifty IT index closing down 3.09%. Software services provider Infosys Ltd fell 3.6% and was the top drag on the Nifty 50 while HCL Tech fell nearly 4%.
Here is what analysts said on today's market performance:
S Ranganathan, Head of Research at LKP Securities
"With US 10-year yield hitting their highest level in over a year, bears held the upper hand today even as the Fed kept rates unchanged. Selling in financials kept markets in the red with broader markets seeing profit booking in IT and pharma stocks ahead of the FTSE rebalancing tomorrow."
Hemang Jani, Head Equity Strategy, Broking & Distribution, Motilal Oswal Financial Services
“Nifty and Sensex were down 1.25 % today despite positive statements by US Fed on the interest rate outlook and continuance of accommodative policy. Indian market has been in a corrective phase due to factors like high bond yields in US, slew of QIPs and IPOs taking away liquidity from the system and increased no of covid cases being reported across the country. Market may remain dull over in the near term but once the Q4 earning previews start flowing in there would be renewed interest by market participants."
Vinod Nair, Head of Research at Geojit Financial Services.
"Indian equities pared its early optimism and fell into a sharp correction as US bond yield rose to its highest level since January. Dovish comments from the Fed chief on the strong economic bounce back and continuation of its accommodative stance, could not weigh down the rally in the US bond market. Indian markets had witnessed higher volatility compared to its global peers as domestic investors turned extra cautious on increasing Covid cases in India and a fall in FII inflows"
Deepak Jasani, Head of Retail Research, HDFC Securities
"Indian markets continue to perform the worst in the region as resurgence of Covid-19 has led to fears of the momentum in the economy slowing down. A close below 14529 would mean that the Nifty is in the midst of an intermediate correction. 14281-14478 could be the support band for the Nifty while 14639-14696 could provide resistance."
Shrikant Chouhan, Executive Vice President, Equity Technical Research at Kotak Securities
"We are of the view that, the bears are still in total control but intraday chart showing temporary pause near 14500/48900 levels, hence, bears may prefer to take caution stance near 50 day SMA. Technically, the index still maintains lower high and lower low series which suggest medium term weakness. However, on intraday charts the index is in to the oversold zone and expected to trade near 50 day SMA for the next few trading sessions at 14750/49963 levels that would be sacrosanct level. Trading below the same, correction wave is likely to continue till 14450-14460/48890-48700. On the flip side, 14750/49963 could be the immediate hurdle, sustain above the same then we can expect quick relief rally up to 14850-14900/50100-50300 levels."
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