29 May 2024
The market's volatility was influenced by the fall in US markets and the escalation of the Middle East conflict.

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The market's volatility was influenced by the fall in US markets and the escalation of the Middle East conflict.

The Indian markets experienced a 2.5 percent decline on October 27, influenced by various global and domestic factors. These included escalating tensions in the Middle East, surging yields in the US, concerns arising from the continuous exit of foreign institutions, and worries about rate hikes amid lukewarm corporate earnings.

The BSE Sensex dropped by 2.46 percent, or 1,614.82 points, closing at 63,782.80, while the Nifty50 fell by 2.53 percent, shedding 495.35 points to settle at 19,047.30. Concurrently, broader indices such as BSE Small-cap, BSE Mid-cap, and Large-cap indices experienced declines of 3.4 percent, 2.4 percent, and 2.5 percent, respectively.

During this period, both the Nifty and the Sensex recorded losses of approximately 2.5 percent, ranking them among the top losers in global equity markets. Smaller companies faced even more significant declines, with the Nifty Midcap dropping by 3 percent and the BSE Smallcap decreasing by 2 percent, according to Shrikant Chouhan, head of equity research (retail) at Kotak Securities.

Factors contributing to this downturn included elevated global interest rates, apprehensions about economic growth, and lackluster Q2FY24 earnings. All sectoral indices experienced losses, with Nifty Realty, Nifty Metals, and Media being the most affected. Despite this, some notable Nifty gainers included Axis Bank, Coal India, and HCL Tech, while UPL, Adani Enterprises, and JSW Steel faced significant losses.

Foreign Portfolio Investors (FPIs) mirrored the trend in emerging markets by continuing to sell, while Domestic Institutional Investors (DIIs) remained net buyers. In October, FIIs sold equities worth Rs 26,598.73 crore, whereas DIIs purchased equities worth Rs 23,437.14 crore.

The market’s volatility was influenced by the fall in US markets and the escalation of the Middle East conflict. Ongoing developments in the US markets and the geopolitical crisis are expected to impact global markets in the days ahead. However, India’s domestic economy benefits from robust economic growth and strong fundamentals. Additionally, the likelihood of domestic interest rates remaining stable for an extended period provides some positive outlook despite the recent spike in money market yields, as noted by Joseph Thomas, head of research at Emkay Wealth Management.

The BSE Smallcap index witnessed a 3.4 percent decline, primarily driven by the poor performance of companies such as MMTC, Sterlite Technologies, Ion Exchange (India), Kamdhenu Ventures, Refex Industries, Prakash Industries, Sangam (India), Finolex Industries, KIOCL, PNB Gilts, and Bharat Wire Ropes.

 

Several stocks, including, Sadhana Nitrochem, Swan Energy, Talbros Automotive Components, CreditAccess Grameen, Voltamp Transformers, Punjab Chemicals & Crop Protection, and Ramco Industries, experienced significant gains ranging from 10% to 20%. However, the focus now shifts to the future trajectory of Nifty50. Let’s explore the insights provided by experts in the field.

Jatin Gedia, a Technical Research Analyst at Sharekhan by BNP Paribas, analyzed the weekly charts and noted that the Nifty respected the support zone between 18,800 and 18,925, marked by essential indicators like the 40-week average and a crucial Fibonacci retracement level. He suggests a possible consolidation within the range of 18,800 to 19,200 before the market resumes its downward movement. According to Gedia, resistance levels are anticipated at 19,160 to 19,220, while immediate support is expected around 18,930 to 18,900.

Rupak De, a Senior Technical Analyst at LKP Securities, observed a temporary halt in the Nifty’s decline due to an oversold chart setup, although the index closed below the critical breakdown level of 19,250. De warns that as long as the Nifty remains below 19,250, the market may continue to lean towards selling during upward movements. He also highlights the significance of the 18,800 level, stating that further weakness might resume if the index falls below this point, as put writers are likely to defend the Nifty with substantial positions at 18,800, with immediate support at 19,000.

Amol Athawale, Vice President of Technical Research at Kotak Securities, emphasized the persisting negative factors such as the Israel-Hamas conflict, rising US bond yields, FII fund outflows, and concerns about rate hikes, which could lead to continued market volatility. Analyzing the technical aspects, Athawale observed a long bearish candle on the Nifty’s weekly charts, indicating a strong possibility of further weakness from current levels. He suggests that as long as the index remains above 18,900, a pullback rally could extend to the range of 19,200 to 19,275. Conversely, dropping below 18,900 might intensify selling pressure, potentially causing the index to decline further to 18,800, or even 18,700.

Please note that the views and investment tips expressed by these experts are their own and do not represent the opinions of the website or its management. It is advisable for users to consult certified experts before making any investment decisions.

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