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The bear grip seems to tighten with every passing day on Dalal Street as Nifty is now 10% down from its 52-week high; More correction ahead?
Bear Bites: Sensex, Nifty Trade With Deep Cuts
Indian equities have been on a rollercoaster ride over the past month, with sharp bouts of selling swiftly followed by bargain hunting as investors pounce on dips. The bear grip seems to tighten with every passing day on Dalal Street as Nifty is now 10 per cent down from its 52-week high of 26,277 while Sensex has lost over 8,300 points from its peak.
While the headline indices will be treated in bear grip if they fall below 20 per cent from the peak, retail investor portfolios are already reflecting signs of a bear market as more than 900 stocks above Rs 1,000 crore market capitalisation are down at least 20 per cent from their 52-week high levels.
It was just less than 2 months ago on 27 September when the Sensex scaled its last 52-week-high of 85,978. By falling over 1,000 points during the day, Sensex fell below the 78,000-mark while Nifty fell near the 23,500-level, below its 200-DMA for the first time since April 2023.
Today’s decline marked the indices’ fifth straight session of losses amid persistent selling pressure from foreign institutional investors (FIIs), with broader market sentiment hampered by a confluence of factors shaking investor confidence.
The correction reflects investors’ growing caution amid rich valuations and macroeconomic uncertainties, with both Nifty and Sensex falling to their respective five-month lows today.
This latest downturn was intensified by sustained foreign investor outflows, disappointing corporate earnings, and rising inflation, according to experts. Since late September, foreign investors have withdrawn approximately $14 billion from Indian equities, reported Reuters.
This is the first significant correction in the market in terms of both time and price since March 2023, said Santosh Meena, Head of Research, Swastika Investmart.
FII Incessantly Pulling Out Money
Despite domestic institutional investors retaining faith on the India story, foreign institutional investors (FIIs) have been incessantly pulling out money from Indian stocks as China looks relatively better amid lower valuations and stimulus measures.
Since October, FIIs have pulled out a record Rs 1.2 lakh crore from Dalal Street.
“From the emerging market perspective, the rise in the dollar index and the sharp spike in the US 10-year bond yield to 4.42 per cent are causes of concern. Such high yields in US bonds will facilitate more outflows from emerging markets to the US. This will continue to be a headwind for India,” said Geojit’s Dr. V K Vijayakumar.
Weak Corporate Earnings In Q2
Corporate earnings have also failed to reassure markets, with several companies reporting their weakest quarterly performances in over four years. Adding to the strain, October’s retail inflation reached a 14-month high of 6.21 percent, dampening hopes of an interest rate cut by the Reserve Bank of India in the near future.
NSE To End Weekly Expiry For Bank Nifty From Today
Further, with today marking the end of weekly Bank Nifty derivatives contracts, traders are expected to be unwinding positions, possibly weighing on banking stocks.
The Bank Nifty index shed more than 1,250 points, or 2.5 per cent, slipping below 50,000 points. Banking heavyweight counter HDFC Bank was down 2.26 per cent at Rs 1,679.3; ICICI Bank fell 1.26 per cent to Rs 1,254.55; while SBI was down 2.23 per cent at Rs 808.25.
Nifty Technicals
On the technical charts, Nifty is now trading near its 200-DMA and looks heavily oversold, suggesting a potential temporary bottom around the 23,500 level.
“However, the 24,500 level will likely serve as a key resistance. Given these conditions, a relief rally in Nifty and Bank Nifty appears possible, though Midcap and Smallcap indices may still face further downside risk,” Meena said.
Disclaimer:Disclaimer: The views and investment tips by experts in this News18.com report are their own and not those of the website or its management. Users are advised to check with certified experts before taking any investment decisions.
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