Indian benchmark stock indices extended their losing streak today, with the Sensex plunging 900 points to 73,000 and the Nifty50 index crashing 282 points to 22,857 in early trading. This marks the sixth consecutive session of declines for the Nifty, shedding approximately 1.7% overall.
Key Factors Driving the Market Downturn
Several factors contributed to the significant dampening of market sentiment:
- Elevated Global Yields: Higher global bond yields put pressure on equity markets, making fixed-income investments more attractive.
- Persistent Foreign Fund Outflows: Foreign institutional investors continued to withdraw capital from Indian markets, further impacting liquidity and sentiment.
- West Asia Crisis and Rising Crude Prices: Brent crude oil prices surged to $99.19 per barrel today, following a 2% increase amid an escalation of the West Asia crisis. This rise was triggered by US President Donald Trump's rejection of Iran's latest peace proposal, exacerbating geopolitical tensions and concerns over energy costs.
The increase in crude prices, with Brent climbing to $91.58 and WTI rising to $85.55 a barrel, adds inflationary pressure and impacts corporate profitability, particularly for sectors reliant on oil imports.
Expert Outlook and Trading Strategy
Shrikant Chouhan, Head Equity Research at Kotak Securities, provided insights into potential market movements. He stated, "On an immediate basis, the Nifty has support at 22,800, followed by 22,600, while the corresponding levels for the Sensex are 73,200 and 72,500."
Chouhan added, "A sustained move above 23,300 on the Nifty would be positive and could trigger a recovery towards 23,600. Similarly, a move above 74,500 on the Sensex could support an upward move towards 75,500."
He recommended a strategy of accumulating select stocks within the 22,800–22,600 range for the Nifty and 73,200–72,500 range for the Sensex. Conversely, he suggested using any recovery towards 23,200–23,300 on the Nifty and 74,200–74,500 on the Sensex to reduce weak long positions.
Despite today's downturn, domestic benchmarks had ended higher on Friday, with the Sensex rising 315.20 points (0.43 per cent) and the Nifty gaining 77.40 points (0.34 per cent). Realty, auto, and FMCG stocks were among the top sectoral gainers then, while IT remained subdued.