FOREX
Stocks tumble after initial gains as investors eye US Fed announcement
The Indian equity markets failed to sustain their early gains on Thursday, with the Sensex and Nifty 50 closing lower amid volatility and mixed global cues. The benchmark Sensex tumbled 836.34 points or 1.04 per cent to end the day at 79,541.79, while the Nifty 50 declined 284.70 points or 1.16 per cent to close at 24,199.35.
The day started on a positive note, with the Sensex opening at 80,563.42 and the Nifty at 24,489.60. However, the markets soon succumbed to selling pressure, with the Sensex hitting a low of 79,419.34 during the session.
According to Prashanth Tapse, Senior VP (Research) at Mehta Equities Ltd, the fall in the markets can be attributed to “continuing foreign fund outflows after the rupee slumped to fresh lows following strength in the US dollar.” Investors also remained cautious ahead of the US Federal Reserve’s policy announcement, unsure of the likelihood of a rate cut this time due to concerns over a potential uptick in inflation.
The Nifty Next 50 index closed 1.05 per cent lower at 70,639.90, while the Nifty Midcap Select and Nifty Bank indices declined by 0.48 per cent and 0.77 per cent, respectively. The Nifty Financial Services index also fell 0.89 per cent.
Among the top gainers on the NSE were Apollo Hospitals, which gained 6.34 per cent, followed by SBI (0.42 per cent), HDFC Life (0.40 per cent), and TCS (0.15 per cent). The top losers included Hindalco (-8.42 per cent), Trent (-6.12 per cent), Grasim (-3.07 per cent), Shriram Finance (-2.96 per cent), and Adani Enterprises (-2.74 per cent).
According to Ameya Ranadive, Chartered Market Technician, CFTe, and Senior Technical Analyst at StoxBox, the benchmark index “experienced a muted opening but quickly succumbed to selling pressure, resulting in a sharp decline of 314 points within the first hour of trading.”
Nagaraj Shetti, Senior Technical Research Analyst at HDFC Securities, noted that the Nifty “failed to sustain above the resistance area of 24,500” and that “some more consolidation or minor dip is expected towards 23,800 or slightly lower.” He added that “until Nifty surpasses above 24,500 levels, meaningful upside rally is not expected.”
Deepak Jasani, Head of Retail Research at HDFC Securities, commented that the Indian markets “started pricing in the effects of Donald Trump winning the US election on emerging markets’ financial assets, which weighed on the risk-on sentiments.” He also noted that the Indian rupee continued to weaken, even as the US dollar gave up some gains made on the previous day.
Osho Krishan, Senior Analyst - Technical & Derivatives at Angel One Ltd, stated that the latest price movements “illustrate the underlying sentiment as markets did not demonstrate sustained buying after the momentum observed in the previous two sessions and retracted into the slumber zone.” He added that 24,000 is likely to be seen as an intermediate support level, followed by the “sacrosanct support of 23,900-23,800.”
Shrikant Chouhan, Head Equity Research at Kotak Securities, noted that the market “failed to sustain above 24,500/80,300 levels which turned negative for the market and it closed at the lowest point of the day at 24,200/79,400.” He added that the strategy should be to “reduce weak long positions if the indices break the 23,800/78,200 levels.”
Hrishikesh Yedve, AVP Technical and Derivatives Research at Asit C. Mehta Investment Interrmediates Ltd. (A Pantomath Group Company), commented that the Nifty “continues to respect 150-Days exponential moving average (DEMA) support near 23,990, as well as recent swing support near 23,800.” He expects the index to “consolidate in the range of 23,800 to 24,700.”
Jatin Gadia, Technical Research Analyst at Sharekhan by BNP Paribas, maintained a “bullish outlook for the Nifty for targets of 25,350 from a short-term perspective,” with 24,000 acting as a crucial support level. For the Bank Nifty, he expected the “undertone to remain sideways to bullish from a short-term perspective.”
Vinod Nair, Head of Research at Geojit Financial Services, noted that the “broader market saw a widespread sell-off as optimism over Trump’s election victory waned,” and that investors are now shifting their attention to the upcoming Fed policy meeting and domestic public outlay.
Overall, the Indian equity markets experienced a volatile session on Thursday, with the Sensex and Nifty 50 closing in the red amid concerns over the US Federal Reserve’s policy announcement and continued foreign fund outflows. Experts believe that the markets may consolidate in the near term, with key support levels at 23,800-24,000 for the Nifty 50.
