Indian equity benchmark indices, BSE Sensex and Nifty50, began the trading week in the red, with Sensex dropping 400 points and Nifty50 slipping below the 22,000 mark. Market experts foresee continued volatility, influenced by corporate earnings, global events, and Lok Sabha election news.
The Indian stock market faced a challenging start to the week as both the BSE Sensex and Nifty50 opened in negative territory. With Sensex plummeting by 400 points and Nifty50 slipping below the crucial 22,000 mark, investors braced for a tumultuous trading day. At 9:21 AM, Sensex was recorded at 72,262.99, marking a decline of 401 points or 0.55%, while Nifty50 stood at 21,952.80, down by 102 points or 0.46%.
Market analysts foresee a continuation of the volatility witnessed in recent times, attributing it to various factors including the upcoming fourth-quarter corporate earnings, global economic developments, and news surrounding the 2024 Lok Sabha elections. Siddhartha Khemka, Head of Retail Research at Motilal Oswal, commented, “We expect this volatility to continue in the near term in the absence of any major positive trigger. Now till Nifty holds below 22000 zones, weakness could be seen towards 21700.”
Adding to the cautious sentiment, Rupak De, Senior Technical Analyst at LKP Securities, highlighted Nifty’s breakdown from the rising channel on the daily chart, signaling a bearish sentiment with resistance noted at 22,200. He suggested a sell-on-rally approach for traders as long as Nifty remains below this critical level.
Internationally, U.S. stocks managed to register modest gains despite concerns surrounding inflation data. However, Asian markets opened lower due to reports of a slowdown in China and U.S. President Joe Biden’s plans to increase tariffs on specific Chinese goods.
Furthermore, oil prices continued their decline, reflecting weak fuel demand and statements from U.S. Federal Reserve officials dampening expectations of interest rate cuts, which could potentially impact economic growth and fuel demand.
Meanwhile, major currencies remained steady as investors awaited U.S. inflation data to assess the possibility of interest rate adjustments.
In terms of institutional activity, foreign portfolio investors (FPIs) remained net sellers, while domestic institutional investors (DIIs) were net buyers. The Indian rupee experienced marginal fluctuations, closing slightly lower against the U.S. dollar due to the offsetting effects of positive domestic equities and elevated crude oil prices.
Additionally, investors are keenly observing fourth-quarter earnings announcements from companies like Varun Beverages, Zomato, Jindal Steel, and Tube Investments, expecting these reports to provide further insights into market direction.
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