The key benchmark indices continue to drift lower as the day progresses on the back of weakness in private banks, NBFCs and select index heavyweights like, Larsen & Toubro, Hindustan Unilever, ITC and Bharti Airtel. At 1.50 pm, the BSE Sensex was trading 1,140 points, or 1.95 per cent, lower at 57,502. The NSE Nifty50 stood at 17,183, down 333 points or 1.90 per cent. The domestic equity benchmarks extended slide into the afternoon trade, as strong jobs data in the US increased fears of sharper than expected Fed rate hikes.
The HDFC twins accounted for almost one-third of the Sensex losses. HDFC Bank was down 3.5 per cent and HDFC shed 2.5 per cent, accounting for a loss of 300 points. Infosys was the other major dragger, accounting for a loss of 100 points, as the stock slipped 1.9 per cent.
The broader markets, however, were seeing lesser losses compared to the benchmark indices. The BSE Midcap and Smallcap indices were down 0.8 per cent and 0.4 per cent, respectively, as against 1.5 per cent decline in the BSE benchmark index. The week will see investors reacting to the RBI policy outcome on Thursday, its commentary on inflation, IIP reading, quarterly earnings and trends in the bond market.
Why are Stock Markets Falling?
Speaking about today’s market crash, Santosh Meena, head of research, Swastika Investmart Ltd., said: “Indian market is witnessing a sharp cut in today’s trading session and this weakness can be attributed to heavy selling by FIIs amid rising US bond yields and crude oil prices. If we look at the profile of the stocks then there is a sharp cut in FIIs’ favorite names and heavyweights like HDFC twins, ICICI Bank, Infosys, Kotak Bank, Reliance, etc., therefore we can expect large FIIs’ selling figure in today’s trading session however there is good buying in PSU banks, metal stocks and sugar stocks where earnings were strong. However, if we talk about domestic cues then the budget was good and earning momentum is strong but the important question: “is the market looking nervous ahead of state elections?”
What investors should do?
Markets have been witnessing volatile swings, mirroring their global counterparts and it may continue in near future. Besides, the upcoming event i.e. MPC’s monetary policy review and earnings would further add to the choppiness. We have been seeing consolidation in the index for the last 3 months and indications are in the favour of prevailing bias to extend. “We thus recommend focusing on sector-specific opportunities while keeping a check on leveraged positions. On the benchmark front, Nifty may find support at 17,350 and 17,000 levels in case the profit taking continues while the 17,850-18,000 zone would act as a hurdle,” said Ajit Mishra, VP Research. Religare Broking commenting on how this week looks for the benchmark indices.
“Investors can consider such selling as an opportunity to buy fundamentally strong stocks some sectors like PSU banks, metals are seeing good buying where they report good earnings,” suggested Manoj Dalmia, Founder & Director, Proficient Equities Limited.
Narendra Solanki, Head- Equity Research (Fundamental), Anand Rathi Shares & Stock Brokers, said: “With results season almost over the investors should focus on stock specific bets as broader markets seems to be in consolidation mode. Also, with continued FII selling pressure broader markets are unlikely to witness any runaway rally in near term. Also markets would be watching RBI’s stance in this week’s policy meet for further cues.”
On outlook on markets ahead, Solanki further said: “With Q3 results almost coming to end markets have now gradually started to price in FY23 numbers for the companies and looking at the consensus estimates of NIFTY50 EPS for FY23, it has seen downward revisions this season which could also be adding to already muted sentiments. Having said that, markets could continue to be stock specific in mid-term.”
“On the technical front, the index has slipped below the prior bearish candlestick on the daily time frame, which points out the weakness in the counter for the time being. Moreover, the index has also traded below middle bollinger band formation and 21-days SMA, which indicates further bearishness for the coming days. On an hourly chart the index has shifted below the Rising Trendline, which suggests a weakness. An indicator stochastic witnessed a negative crossover on a daily scale. At present, the Index has support at 17,250 levels while resistance comes at 17,800/18,000 levels,” said Sachin Gupta, AVP, research, Choice Broking.
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