In 7 days, Sensex falls 3,000 points: Will extreme selloff ease now?
Premium- Sensex and Nifty opened gap-up today but could not hold on to gains
Indian stock markets ended lower for the seventh straight session as risk-off sentiment returned to global equity markets. NSE Nifty 50 index fell 0.24% to 16,818.10, while the S&P BSE Sensex dropped 0.33% to 56,409. Both the indexes saw their worst losing streak since mid February. In the 7-day selloff, Sensex has seen a correction of over 3,000 points.
Participants also remained in wait-and-watch mode ahead of the RBI's interest rate decision, scheduled tomorrow. The RBI, which has since May raised the short-term lending rate (repo) by 140 basis points (bps), may again go for a 50-bps increase to take it to a three-year high of 5.9%, say experts.
In today's trade, Asian Paints was the biggest laggard in the Sensex pack, tumbling 5.22%, followed by Tech Mahindra, Titan, Kotak Mahindra Bank, Bajaj Finance, TCS, Wipro and Bajaj Finserv.
Nifty opened the gap up in line with gains made overnight in the US markets but kept sliding through the day. Risk-off sentiment returned to global equity and bond markets on Thursday as concern about inflation and the risk of global recession overshadowed the Bank of England’s move to support the gilts market, said Deepak Jasani, Head of Retail Research, HDFC Securities.
Nifty has support at 16653-16752 band while 17026 remains a resistance.
The Nifty IT index fell 0.9%, while the energy index dropped 0.8%. Midcap and smallcap indices outperformed rising 0.31-0.63% with advance-decline ratio ending at a positive 1.37:1.
Foreign institutional investors have sold nearly ₹11,000 crore worth equities so far into the week until Wednesday, National Stock Exchange data showed.
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“Markets have been making attempts for a rebound. However weak global cues combined with continuous selling from foreign investors are weighing on sentiment. We feel the overall tone would remain bearish until the Nifty reclaims 17,200. On the downside, a decisive break of 16,800 could further fuel the decline. Participants should align their positions accordingly and maintain positions on both sides," said Ajit Mishra, VP - Research, Religare Broking Ltd.
Nifty Technical Outlook
"Going ahead, 16800 is likely to act as crucial support. Any drift below 16800 on a sustained basis may attract selling pressure in the market. On the lower end, support is visible at 16640. On the higher end, 17050 is likely to remain a strong resistance," said Rupak De, Senior Technical Analyst at LKP Securities.
Nagaraj Shetti, Technical Research Analyst, HDFC Securities, said,"Further weakness below 16800 levels, the market could slide down to the next key support around 16650 levels, which is a 50% Fibonacci retracement taken from the June bottom to September top. Any upside movement from here could encounter strong resistance around 17030 levels."
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