New Delhi. The stock market had a weak start on Tuesday. A big red candle in Sensex and Nifty-50 spoiled the whole mood. After that there was some further decline, but by 2 pm both the indexes had recovered significantly. After 2 o’clock suddenly selling started again and the stock market went negative. Today Nifty-Fifty fell 103.40 points (0.40 percent) and closed at 25910.05, while BSE Sensex closed at 84673.02 after falling 277.93 points (0.33 percent).
The Nifty 50 stocks that were under the most pressure included InterGlobe Aviation, Tech Mahindra and Hindalco Industries, which fell by more than 2 per cent. While some strong stocks like Bharti Airtel and Axis Bank rose by more than 1 per cent.
What were the reasons for the decline in the stock market?
The biggest reason behind the market fall was the deterioration in the overall environment of foreign markets. Major indexes in Asia such as South Korea’s Kospi, Japan’s Nikkei 225, Shanghai’s SSE Composite and Hong Kong’s Hang Seng were all down. In America too, the market closed in the red on Monday night, as investors were cautious about the economic data coming this week, especially the September jobs report.
The second reason was profit booking. Selling was seen in almost all sectors. Prashant Tapse, senior vice-president (research), Mehta Equities, said, “Overall, the fundamentals of the domestic market are strong. Political stability, falling inflation, soft crude oil prices and expectations regarding trade talks are supporting the market. However, weak global sentiment is exerting some pressure.”
Nifty IT and metal indices were badly hit
IT and metal sectors suffered the most damage. Nifty IT fell by about 1%, with stocks like Mphasis, Coforge and Tech Mahindra falling the most. The reason is that now there is less expectation in the market that the US Federal Reserve will reduce interest rates in December. According to CME FedWatch tool, the probability of rate cut was 62.4 percent last week, which is now only 42.9 percent. High interest rates in the US generally weaken emerging markets like India.
Similarly, Nifty Metal index also fell by 1.5%. A major reason for this is that the dollar is strengthening, which increases pressure on metal companies. Tuesday was even more volatile because there was also the expiry of weekly futures and options.
Rupee also slipped in the beginning
The rupee also slipped in the beginning. It opened 8 paise weaker at 88.67 per dollar. The reason for this was selling in equities and uncertainties related to global trade. Traders are also currently waiting for the India-US trade deal and the upcoming domestic PMI data.
Talking about technical charts, Anand James, Chief Market Strategist, Geojit Financial Services, said, “Nifty is not visible in any clear direction right now. As long as the levels of 26,130 and 25,840 remain intact, the market is likely to move sideways i.e. in a range. First the decline may come to 25,980 or 25,900 and after that there will be an attempt to go up. If the market goes straight If it goes above 26,022, it can reach 26,130.”
