«On Thursday, the Sensex concluded at 78,058.16, thereby experiencing a drop from true levels by 213 points, or -0.27%, while Nifty 50 settled down at 23,603.35 with a loss of 93 points, or -0.39%. The BSE Midcap Index dropped by -0.87%, while Smallcap stayed off the charts,» he said from the outside.
Bearings turn downward. Points taken from the weaknesses over two consecutive trading sessions suggest the Sensex lost 526 points or -0.70%, while the Nifty 50 was down to-136 points or 0.6%.
The combined market value of the companies listed on the BSE shed an estimated ₹2.03 lakh crore, sinking to roughly ₹425.25 lakh crore from the previous day's ₹427.28 lakh crore.
Among sectoral indices, those seeing the highest loss were Nifty Realty and Consumer Durables, with a drop of -2.19% in the latter and -1.84% in the former.
Those other sector indices losing more than one IPP were Nifty FMCG by -0.96%, Auto by -0.93%, Media by -0.75%, Metal by -0.75%, and PSU Bank by -0.73%.
However, Nifty Bank managed a small gain of 0.08%, with all other indices heading south. Then came the shift! Nifty Pharma pushed 0.64% upwards and IT by 0.31% instead of getting crushed. attrition of currencies, indeed.
What underlying factors suggest the recent decrement of the Indian stock market?
Five main reasons were cited by experts to account for the unfavorable performance of the market on Thursday:
1. Caution ahead of the monetary policy of the Reserve Bank of India (RBI): Investors are treading warily before the Reserve Bank of India (RBI) Monetary Policy Committee (MPC) deliberations on interest rates on Friday. While a 25bps cut is largely anticipated, the rate cut-door may remain susceptible with a longer duration; run long «People were taking profits before the front going rate-sensitive sectors such as realty, banks, and auto stocks on announcements of tomorrow's monetary policy. A surprise cut could act as a short-term morale booster,» commented the Senior VP, Head of Research at Mehta Equities, Prashanth Tapse.
2. Negative performances of key stocks before Q3 results – Certain companies, including Bharti Airtel, ITC, and SBI, dragged the Sensex down. All of them were expected to announce their December quarter performance results on Thursday.
3. Fall of the rupee – The weak Indian currency sapped the momentum from the markets. According to Reuters, the rupee touched an all-time low of 87.58 but ended its session at 87.5775. Domestically, the Indian currency is down more than 2% year-to-date.
4. Foreign capital fleeing the economy – After having bought Indian equities worth ₹809 crore on February 4, the foreign institutional investors (FIIs) sold the following day itself: Indian equities were liquidated worth ₹1,682.83 crore on February 5. This means in the months to come, they are busy depleting their hold in the Indian equities off and on since October 2024.
5. Unable to break the resistance line: The Nifty 50 rose by about 0.30% to achieve an intra-day high of 23,773.55 but then began to fall. This was bad for Nifty, as it started to slip below 23,600.
Rupak De, Senior Technical Analyst, LKP Securities, raised a question about how the prevailing momentum might be affected to a large extent by the monetary policy statement to be given by RBI on Friday.
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«Looking technically, the level of 23,500 may prove to be a crucial support, but a break below it could destroy the bullish confidence. Equally, the resistance level will be seen at 23,800 and 24,050,» De emphasized.
On the daily charts, Nifty 50 is showing formation of a bearish candle near the 50-day Simple Moving Average (SMA), indicating a deterioration in the price from here on. Therefore, with respect to price action, it seems the short-term market is good.
«If the market sustains above 23,500, it could cross 23,750-23,800 or more. On the other side, if trading happens below 23,500, the upward bias could come to an end. Below this level, traders holding long might consider liquidating the positions,» concluded Shrikant Chouhan, head of equity research at Kotak Securities.