Weak global cues continued exerting pressure on the Indian market as frontline indices the Sensex and the Nifty ended sharply lower on September 23.
The market is reeling under pressure due to concerns over aggressive rate hikes and a recession. Many central banks are lifting rates more aggressively as inflation remains at a multi-year high level and the Ukraine war looks far from over.
"Interest rates rose sharply this week in the United States, Britain, Sweden, Switzerland and Norway - among other places - but it was Federal Reserve's signal that it expects high US rates to last through 2023 that set off the latest sell-off," reported Reuters.
The fresh aggression by Russia has also added to the negativity in the market. Russian President Vladimir Putin threatened the West a couple of days ago, alluding to nuclear weapons, that Russia would use all the means to protect itself.
Sensex opened 115 points lower at 59,005.18 and plunged 1138 points in intraday trade to 57,981.95. It closed 1,021 points, or 1.73%, lower at 58,098.92 while the Nifty closed at 17,327.35 with a loss of 302 points, or 1.72%.
The selloff was widespread and the mid and smallcaps suffered more. The BSE Midcap index closed 2.28% while the Smallcap index ended with a cut of 1.92%.
"Negative global cues and FIIs turning heavy sellers impacted investors' sentiments on the last day of the week. US Fed’s aggressive stance has increased recessionary fears on the global front and created nervousness in domestic markets," said Siddhartha Khemka, Head - Retail Research, Motilal Oswal Financial Services.
Vinod Nair, Head of Research at Geojit Financial Services pointed out that a rise in the US 10-year bond yield and a strong dollar index influenced FIIs to flee emerging markets.
"A fall in liquidity in the banking system, a weak currency and a current premium valuation have set the market outlook bearish for the near term. With aggressive monetary policy action by central banks, the global growth engines are in a slowdown mode, whereas India is currently in a better position with a pickup in credit growth and an uptick in tax collection. The current volatility might persist for a while. Investors are advised to wait and watch until the dust settles," said Nair.
Only three stocks - Sun Pharma (up 1.53%), Tata Steel (up 0.58%) and ITC (up 0.33%) - ended in the 30-share pack Sensex.
Power Grid (down 7.93%), Mahindra & Mahindra (down 3%) and SBI (down 2.99%) ended as the top laggard stocks in the Sensex basket.
All sectoral indices ended in the red, with BSE Utilities (down 3.48%) and Power (down 3.40%) falling the most. Realty, Bankex, Financial Services, Capital Goods and Telecommunications fell more than 2% each.
The overall market capitalisation of BSE-listed firms dropped to ₹276.7 lakh crore from ₹281.5 lakh crore on September 22, making investors poorer by ₹4.8 lakh crore in a single day.
"Nifty was showing signs of weakness from its opening and broke its crucial support of 17,400 levels. India VIX rose sharply by 9.2% to 20.5 levels, indicating that volatility may remain high going forward. India would continue to take cues from the global front as well as the upcoming RBI meeting which is also expected to hike interest rates in line with US Federal Reserve," Khemka said.
The rupee fell 12 paise to close at 80.99 per dollar. Brent Crude fell more than 2% in trade and traded below the $90 a barrel mark.
The Nifty has been trading with lower high and lower low formations for the last four trading sessions.
Palak Kothari, Senior Technical Analyst at Choice Broking underscored that the index formed a bearish candle on a daily chart. It is trading below 21 DMA (daily moving average) which adds bearishness to the prices.
Kothari highlighted that Nifty has given a breakdown of the horizontal line and given closing below the same which adds bearishness to the prices. On the open interest (OI) front, the highest Call OI was witnessed at 17,600 while on the Put side, it was at 17,000 level. Daily momentum indicator MACD traded with a negative crossover which points out the weakness in the counter.
"The support for Nifty has shifted around 17,150 while on the upside, 17,700 may act as an immediate hurdle," said Kothari
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