Bears Bring Over 1% Slippage in D-Street, Sensex and Nifty: Key Reasons for Market Fall

Last Update:28 November 2024 13:16 IST

Sensex Today: Indian benchmark equity indices traded lower on Thursday; Key Points on Why the Market Dropped Today?

Bear Bites: Sensex Trades Stylishly With Deep Cuts

Indian benchmark stock indices traded lower on Thursday following a decline in global markets. The main reason for this decline was losses in IT stocks due to concerns about the policies of US President-elect Donald Trump and renewed uncertainties about the outlook for US interest rate cuts.

BSE sensex It was trading at 79,301, down 933 points or 1.16%, while Nifty50 was trading at 24,009, down 266 points or 1.09%, around 12:43 pm.

Among Sensex stocks, Infosys, Tech Mahindra, M&M, HCL Tech, TCS and Power Grid were the top losers, falling up to 3%. On the other hand, only SBI, Adani Ports and Tata Motors managed to trade in the green.

Key Factors Behind Today’s Market Decline:

IT And Auto Stocks Drag

IT and auto stocks were the major factors negatively impacting Nifty, while sectoral indices fell 2.3% and 1.3% respectively. Infosys shares led losses in the IT sector, losing 3%, TCS 2.2%, Tech Mahindra 2.5% and HCL Tech losing 2%.

In the auto sector, Mahindra & Mahindra (-3.2%) and Eicher Motors (-2%) were among the biggest losers.

The decline in IT stocks came after the release of US inflation data showing interest rate cuts were slower than expected. This has raised concerns about declining customer spending, a key factor for Indian IT firms that have significantly penetrated the US market.

Global Interest Rate Concerns Affecting Sentiment

Krishna Rao, co-head of equity brokerage JM Financial Services, said: “We expect markets to remain volatile amid the possibility of slower rate cuts in a high-growth environment in the US and rising inflation following Trump’s presidential victory.” Potential delay U.S. interest rate cuts have increased uncertainty about emerging markets and weakened investor confidence.

The strengthening US dollar has also reduced the attractiveness of emerging market assets, and Asian stocks are feeling the pressure from the dollar’s recent gains and growing concerns about escalating trade tensions.

Cautious stance from institutions, FIIs may not turn aggressive buyers

Geojit Financial Services Chief Investment Strategist VK Vijayakumar pointed out that major institutions are adopting a cautious approach amid global uncertainties. “While the end of continued FII selling is a positive sign, given the strong dollar and macroeconomic challenges in emerging markets, FIIs are unlikely to turn to aggressive buyers,” he said. Vijayakumar added that institutions will wait for more clarity about the US President. Choose Donald Trump’s policies and their impact on global trade.

Technical resistance for Nifty

Choice Broking Research Analyst Mandar Bhojane stated that Nifty 50 continues to trade in a narrow range of 24,000 to 24,350. Technical indicators such as the RSI momentum signal point to upward movement, indicating a potential bullish crossover. If the index remains above the 24,400 level, it could potentially move towards 24,800 or even 25,000. On the downside, immediate support levels are seen at 24,000 and 23,900.

Market Outlook

The ongoing correction in the market has brought valuations closer to reasonable levels; Nifty’s price-to-earnings ratio has fallen to an estimated 21 times from its October peak of 25.8. Citing stretched valuations, Anirudh Garg of Invasset PMS suggested raising cash levels in portfolios. “Indian markets may need some respite from current levels,” he said.

Although the pause in FII sales has provided some relief, experts expect volatility to continue in the near term as markets process global signals and policy changes.