The Indian stock market benchmarks, the Sensex and the Nifty 50, suffered significant losses in intraday deals on Tuesday, 8 September, looking set to extend losses for the second consecutive session.
The Sensex declined over 450 points, or about 0.60%, to an intraday low of 75,658, while the NSE counterpart Nifty 50 declined over 0.50% to the day’s low of 23,653 during the session.
In just two sessions, the Sensex has lost more than 800 points, or 1%, while the Nifty 50, too, has lost 1%.
Why is the stock market down today?
Experts highlighted the following three factors behind the downtrend in the stock market:
1. Oil price jumps
A rise in crude oil prices weighed on market sentiment. prices remained close to $100 a barrel on Tuesday as markets awaited details of a proposed Iran-Oman arrangement to manage shipping through the Strait of Hormuz, while increased buying by Chinese refiners added to market tightness, Bloomberg reported.
Crude oil prices have been up for most of the year, driven by the US-Iran conflict. India is the world’s third-largest importer of crude oil.
Elevated oil prices have fuelled concerns about their negative impact on India’s fiscal position, a potential inflation flare-up, and monetary tightening.
2. Lingering concerns over the US-Iran war
Most experts expect the domestic market to remain rangebound as long as a final resolution to the US-Iran conflict is not announced.
Tensions between the two countries reignited after a brief lull. According to reports, threatened the US with “economic warfare” on Tuesday and said it had fired an advanced missile at US warships.
The spokesperson of the Saudi-led coalition in Yemen said 73 people were injured in Saudi Arabia after Yemen’s Iran-backed Houthis attacked the cities of Abha, Khamis Mushait, Jazan and Najran.
“The market is now in the fifth week of a slow but steady downtrend. Elevated crude prices, selling in IT stocks, fears of a Fed rate hike this month and a booming IPO market, which is sucking lots of money, have contributed to this slow grind down in the market,” V K Vijayakumar, Chief Investment Strategist, Geojit Investments, noted.
“Since the macro construct which contributed to this downtrend persists, it is possible that the downtrend may continue in the near-term. But this trend is opening up opportunities for investors in large-caps, which continue to remain weak despite improving fundamentals,” said Vijayakumar.
3. Fed’s policy move in focus
Investors are taking some money off the table ahead of the US Federal Reserve’s meeting next week on 15-16 September. Markets see a 60% chance of an interest rate hike by the Fed next week, according to the CME FedWatch Tool.
Meanwhile, unvestors await the U.S. producer price index data, scheduled for Thursday, and the consumer price index data, due on Friday, for further cues on the Fed’s policy trajectory.
Top contributors to the falling market
Around 11:55 AM, ICICI Bank, Reliance Industries, HDFC Bank, Axis Bank, and Bharti Airtel were the top drags on the Sensex and Nifty indices.
Nifty’s technical view
Shrikant Chouhan, the head of equity research at Kotak Securities, believes 23,800 will act as a key resistance zone. Below this, a correction wave is likely to continue.
“On the downside, the index could slide to 23,670-23,600. On the other side, above 23,800, pullback may continue towards 23,950-24,050,” said Chouhan.
According to Axis Securities, the Nifty chart now shows a sizable bearish candle, indicating underlying profit-booking and supply at higher levels.
Axis views the current structure negatively, with lower highs and lower lows and multiple support breakdowns.
RSI is moving downward and quoting below its reference line, indicating increasing bearish momentum.
“Immediate support is placed at 23,700, followed by 23,500. The immediate resistance zone is placed at 24,150- 24,000,” said Axis.
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