Investors lose ₹6 lakh crore in a single day as the Sensex declines for the third straight session; the main causes of the market decline
Stock market today: On Thursday, the Sensex and the Nifty 50, two indices of the Indian stock market, ended the day in negative territory for the third straight session.
Current state of the stock market: On Thursday, October 17, the benchmarks of the Indian stock market, the Sensex and the Nifty 50, ended the day down for the third straight session. While the Nifty 50 finished 221 points, or 0.89 percent, down at 24,749.85, the Sensex closed 495 points, or 0.61 percent, lower at 81,007 as well.
The Sensex index’s biggest declines at the close were shares of UltraTech Cement, Nestle, and Mahindra & Mahindra. However, the index’s biggest gainers were Infosys, Tech Mahindra, and Power Grid.
The losses in the smallcap and midcap sectors were more severe. While the BSE Smallcap index fell 1.42 percent, the BSE Midcap index fell 1.65 percent.
Investors lost over ₹6 lakh crore in a single day as the total market capitalization of BSE-listed companies fell to around ₹457.3 lakh crore from nearly ₹463.3 lakh crore in the previous session.
“Despite strong US and European signals, markets kept declining as mood was affected by foreign fund sales and a steep decline in auto stocks before Hyundai’s final day of IPO subscriptions. “Banking, real estate, metals, and telecom shares also attracted significant profit-taking as expensive valuations continue to bite,” stated Prashanth Tapse, Senior VP (Research), Mehta Equities.
Why is the Indian stock market declining?
The previous three sessions have seen a 1.5% decline in the Nifty 50. The index is currently 6% lower than when it peaked on September 27 of this year at 26,277.35.
A number of factors, such as a recent escalation of tensions in West Asia, a significant outflow of foreign money following China’s stimulus pronouncements, and thus far underwhelming Q2 profits, might be responsible for the current market decline.
Investors are on edge due to the unstable crude oil prices brought on by the unstable scenario in West Asia. Since India is one of the biggest importers of oil, changes in oil prices may have a detrimental effect on its budget and put pressure on the currency.
One of the main causes of the current market decline has been the loss of foreign money. Indian stocks were sold by foreign portfolio investors (FPIs) every day in October, totaling ₹67,311 crore as of October 16.
Concerns over the market’s high valuations have grown as a result of the September quarter’s disappointing performance.
These values are dependent on strong earnings. Strong profits growth increases investor confidence, maintains the balance of valuation metrics like the P/E ratio, and supports higher stock prices. It becomes difficult to defend high valuations in the absence of robust results, which puts stock prices at danger of declining.
“Massive selloffs in a number of industries caused the local market to suffer large losses. This decline was ascribed to slow credit growth, high non-performing assets, and worse holiday sales projections. Vinod Nair, head of research at Geojit Financial Services, stated that the market’s attitude is being impacted by the weak Q2 results.
Prospects for the Nifty 50
Kotak Securities’ head of equities research, Shrikant Chouhan, claims that the Nifty 50 has created a bearish candle and is maintaining a lower top formation on intraday charts.
We believe that there is a weak market texture, and that this mood will probably persist as long as the Nifty 50 remains below 24,900. The index may decline to 24,550–24,500 on the downside. Conversely, above 24,825, we may witness a single, brief rally to 24,850–24,900,” Chouhan stated.
The Nifty 50 has broken out of a bearish flag formation on the daily chart, indicating a potential short-term decline, according to Rupak De, Senior Technical Analyst at LKP Securities. The RSI is falling and displaying a bearish crossing.
De clarified, though, that given the index’s sharp decline and proximity to double-bottom support, which may lead to a short-term recovery toward 25,000, this would not be the best place to start short bets.
According to De, a sharp decline below 24,700 may trigger a major market downturn.
Disclaimer: The above article is for educational and news purposes, this is not a buying or selling recommendation. TraderPulse recommends that users to check with certified experts before making any investment decisions.
