Benchmark stock market indices ended the trading session on a weaker note, as investors shifted their focus towards the highly anticipated decision from the US Federal Reserve on interest rates. The broader market faced significant headwinds, with the S&P BSE Sensex plunging by 836.34 points, closing at 79,541.79, while the NSE Nifty50 experienced a substantial drop of 284.70 points, settling at 24,199.35.
The day was marked by heightened volatility, with sharp declines observed across most major indices. The sell-off was broad-based, affecting multiple sectors, and investor sentiment was weighed down by global uncertainties and domestic concerns. All Nifty sectoral indices closed in the red, with particular losses seen in banking, financial services, automobile, and IT stocks. The volatility was exacerbated by continuing global economic concerns and the ongoing fluctuations in the currency market, particularly the strengthening of the US dollar.
Despite the overall market downturn, there were a few bright spots among the large-cap stocks. Apollo Hospitals, SBI, HDFC Life, TCS, and Coal India emerged as the top gainers on the Nifty50 index, helping to somewhat mitigate the broader market losses. However, the top losers were Hindalco, Trent, Grasim, Shriram Finance, and Adani Enterprises, which faced significant declines. These stocks had been under pressure due to sector-specific issues and overall market sentiment.
Aditya Gaggar, Director of Progressive Shares, attributed the market’s underperformance to a combination of factors, including weaker investor sentiment and cautious trading ahead of key global events. Gaggar noted that, unlike strong global equity markets, Indian markets began the weekly expiry trade on a lackluster note. A sharp fall in the opening trade was followed by a range-bound market before closing at 24,199.35, down 284.70 points. He emphasized that apart from PSU Banks, all other sectors ended the day in negative territory, with Metal and Pharma sectors emerging as the major laggards.
Technical analysis from Gaggar showed that the Nifty had formed a bearish engulfing pattern on the daily chart. However, he suggested that the index could be in the process of forming the right shoulder of an Inverted Head & Shoulder formation, with neckline resistance at 24,500. On the downside, the psychological level of 24,000 could provide a key support level in the short term, potentially offering some cushion to the market.Â
Prashanth Tapse, Senior VP (Research) at Mehta Equities Ltd, highlighted that despite a positive start, the market failed to maintain its momentum as selling pressure returned after a brief breather. He pointed out that the ongoing foreign fund outflows were one of the key factors driving the market lower, with the rupee falling to fresh lows amidst a stronger US dollar. Tapse also attributed investor hesitation to the upcoming US Federal Reserve policy announcement, which had created uncertainty regarding the timing of a potential rate cut. The prospect of a higher interest rate in the US raised concerns about inflationary pressures, leading to a more cautious outlook among investors.
Tapse further noted that many investors chose to limit their exposure to equities, as the uncertainty surrounding the US Fed's decision created a volatile environment. As the Fed's rate decision looms large, market participants are closely watching for any indications of how the central bank might respond to the ongoing economic challenges, particularly the risks posed by inflation. The market's cautious tone reflected broader global concerns, including the potential impact of rate hikes on emerging markets and the global financial system.
In conclusion, while some stocks showed resilience, the broader market ended the day in the red, with losses across key sectors. The market's performance was driven by a combination of domestic and global factors, including uncertainty over the US Federal Reserve's policy decisions, ongoing currency volatility, and investor caution. As the market awaits further clarity from the Fed, it remains to be seen how the Indian stock market will react in the coming days, especially given the current technical indicators and the challenging global economic backdrop.
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