Why Sensex nosedives 1450 points in two days — explained

Silicon Valley Bank crisis: Ahead of US non farm payroll data and jobless claim data release, Indian stock market extended its weakness for second straight session on Friday. On Friday morning deals, 30-stock index Sensex opened with downside gap and hit intraday low of 58,884, around 920 points lower from its Thursday close of 59,806 levels. On Thursday too, Sensex had shed around 550 points that means the 30-stock index has shed to the tune of 1,450 pints in two straight sessions.

Global market triggers for Dalal Street

According to stock market experts, US dollar has eased after Dollar Index regained 105 levels on Wednesday. However, it failed to sustain on higher levels. But, the profit booking in US dollar has not come to the equities as investors are awaiting US non farm payroll data and US jobless claim data that is expected today. Experts also maintained that today's sell off is because of the trickle down of weakness in banking stocks from Wall Street to Dalal Street.

Nifty Bank index today crashed over 850 points and most of the banking majors are trading red in early morning deals. Experts said that Sensex has strong support at 58,500 and there can be more downside movement if this 200 DMA support is broken.

SVB crisis weighs on Sensex

Speaking on the reason for fall in Sensex today, Santosh Meena, Head of Research, Swastika Investmart said, “India's markets have taken a significant hit as a result of weak global cues. The US market was under pressure due to the decline in shares of SVB (Silicon Valley Bank crisis) and cryptocurrency financier Silver Capital, particularly in stocks related to banking and finance. We lack direction and are currently under selling pressure at higher levels as a result of the extremely volatile global cues over a long period of time. The most recent issue is more US-specific, and there is only an sentimental influence on markets worldwide.”

Santosh Meena of Swastika Investmart went on to add that the market may stay volatile in the lead-up to US job data released today and US CPI figures released next week.

Outlook for Sensex

Unveiling pivot levels in regard to Sensex today, Sumeet Bagadia, Executive Director at Choice Broking said, "Sensex today has immediate support placed at 200 DMA levels of 58,500 levels whereas it is facing hurdle at 59,300. So, the 30-stock index is trading in 58,500 to 59,300 range and there can be further downside movement if the 200 DMA support placed at 58,500 get broken."

Sumeet Bagadia of Choice Broking further added that on breaking 59,300 hurdle on closing basis, we can expect Sensex to go up to 60,000 and 60,500 levels in near term.

On global market factors that may dictate Sensex, Nifty and other indices of Dalal Street, Avinash Gorakshkar, Head of Research at Profitmart Securities said, "Much will depend upon US non farm payroll data and US jobless claim data. If there is more job creation reported in today US economic data, then there will be more pressure on the US Fed to increase interest rates in its upcoming meeting. This will once again provide support to US dollar and trigger further weakness in other asset class including equities, bond, bullions, etc."

In last two days, Nifty Bank index has tumbled around 1200 points whereas Nifty has nosedived 430 points.

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