The domestic market witnessed a strong selloff on January 4 as investors booked profit amid mixed global cues while concerns over global economic growth and the Covid situation in China weighed on sentiment.
After witnessing a flat opening, the equity barometer the Sensex fell 700 points to hit the intraday low level of 60,593.56.
The index finally closed 637 points, or 1.04 percent, lower at 60,657.45. Nifty closed the day with a loss of 190 points, or 1.04 percent, at 18,042.95 ahead of the minutes of the Fed's December meeting which is expected to offer some insights to investors on the path of policy tightening.
Mid and smallcaps also suffered; the BSE Midcap index fell 0.97 percent while the Smallcap index dropped 0.79 percent.
The overall market capitalisation of BSE-listed firms plunged to ₹281.7 lakh crore from ₹284.6 lakh crore, making investors poorer by ₹2.9 lakh crore in a single session.
Concerns over global economic slowdown, sticky inflation and rate hikes have been keeping the market under pressure since 2022. Last year, most global markets suffered losses while the Indian market was among the few that ended in the green.
Meanwhile, the foreign capital outflow is another factor which is negative for the Indian market. As per a Reuters report, foreign investors withdrew more money from emerging Asian equities in 2022 than they had done in any year since the global financial crisis in 2008, as rising US interest rates pulled funds towards dollar assets.
Data from NDSL show that overall, foreign portfolio investors (FPIs) took out ₹1.33 lakh crore from the Indian financial market in 2022. They withdrew ₹1.21 lakh crore from the equity segment last year.
Crude oil prices fell on concerns about weak global demand and the possibility of further interest rate hikes in the US. Brent Crude dropped more than 2 percent to trade near the $80 per barrel mark.
The rupee rose 8 paise to close at 82.81 per dollar as the greenback saw some selling. The dollar index, which measures the greenback against six other currencies, fell as investors remain cautious about the trajectory of rate hikes.
Sensex gainers and losers
At close, only two stocks - Maruti (up 0.22 percent) and TCS (up 0.10 percent) - were in the green in the 30-share pack Sensex.
Shares of Tata Steel, Tata Motors and Power Grid ended as the top laggards, falling up to 2 percent. In terms of index contribution, shares of Reliance Industries, HDFC Bank, Infosys and HDFC emerged as the top drags on Sensex.
All sectoral indices ended with losses on January 4. Nifty Metal and Realty fell more than 2 percent each while the Nifty Bank, PSU Bank, Private Bank, Oil & Gas and Media fell over a percent each.
Experts' views on markets
Shrikant Chouhan, Head of Equity Research (Retail) at Kotak Securities underscored that investors offloaded their holdings ahead of the outcome of the US FOMC minutes meeting that would indicate the signs of interest rate hike trajectory going ahead.
"Other global macroeconomic concerns like the Chinese slowdown due to higher Covid cases, sliding crude oil prices, and the persisting geopolitical tension continue to weigh on investors' minds. There could be heightened volatility in coming sessions due to rising uncertainty," said Chouhan.
"The domestic market affected by the worries in the global market, traded with deep cuts. Fears over aggressive rate hikes resurfaced ahead of the release of Fed meeting minutes, a meeting that left the door open for additional hikes. Apart from global cues, the domestic market will pay close attention to corporate earnings," said Vinod Nair, Head of Research at Geojit Financial Services.
Technical views by experts
Gaurav Ratnaparkhi, Head of Technical Research at Sharekhan by BNP Paribas pointed out that the Nifty faced resistance near a rising trendline and the key daily moving averages for yet another session. Thereon the index tumbled sharply towards 18,000.
"The bulls managed to defend the key psychological level for the day. Unless Nifty breaks 18,000 on the downside, it can once again take a leap towards 18,250-18,300. On the other hand, a breach of 18,000 will allow the Nifty to slide further towards the lower end of the short-term consolidation which is 17,800," said Ratnaparkhi.
Ameya Ranadive, Equity Research Analyst at Choice Broking observed that the Nifty closed over 18,000 which is an important psychological level but encountered significant resistance around 18,250 in recent trading sessions.
"A break above 18,200-18,250 will be a critical level for the Nifty to begin its upward trip. Indicators like the RSI and MACD are losing strength, which would be a drag on the Nifty in the coming days," said Ranadive.
Key market data
Disclaimer: The views and recommendations given in this article are those of individual analysts. These do not represent the views of MintGenie.