Upon Dalal Street, the atmosphere is fraught with electoral unease… Towards the twilight hours of Thursday’s trading session, the indices took a nosedive, each plummeting by over 1%. The Nifty 50 witnessed a sharp decline of 345 points or 1.55%, ultimately settling at 21,957.50 for the day. Meanwhile, the Sensex saw a staggering drop of 1062.22 points or 1.45%, concluding at 72,404.17. HDFC Bank, L&T, Reliance Industries, ITC, and ICICI Bank bore the brunt of the downturn. Other notable losers included BPCL, Asian Paints, Coal India, and ONGC.
Sector-specific indices grappled with downward pressure, particularly the Nifty Midcap 100, which closed at 49,109.15, down by 927.15 points or 1.85%. Similarly, the Nifty Bank ended in negative territory, shedding 533 points or 1.11% to settle at 47,487.90.
The energy, capital goods, and metal sectors bore the heaviest burden on the indices. In the broader market context, smallcap and midcap stocks closed in negative territory. However, in a remarkable deviation from the trend, the automotive sector stood out as the sole performer amidst Thursday’s market turmoil.
From a technical standpoint, following a subdued start, the market breached the support levels of 22200/73200, intensifying selling pressure post-breakdown.
“Upon analyzing the daily charts, it is evident that the index has formed a lengthy bearish candle, indicating a potential continuation of weakness from current levels. While short-term market sentiment appears fragile, temporary oversold conditions may pave the way for a technical rebound from current levels. Traders should keep a close eye on the 22000/72550 level, which could serve as a pivotal point. A breach above 22000/72550 could trigger a bounce-back towards the range of 22100-22150/72300-72500. Conversely, a dip below 22000/72550 may sustain negative sentiment, potentially leading the market towards the 21850-21800/72100-72000 range,” remarked Shrikant Chouhan, Head of Equity Research at Kotak Securities.
The market is poised for further potential declines, as underscored by heightened volatility in the broader market, driven by cautious sentiment surrounding Q4 earnings and electoral uncertainties. The breach of the psychological threshold of 22,000 suggests a continuation of the prevailing trend. Furthermore, global indices exhibit mixed signals ahead of the BOE policy meeting and forthcoming US inflation figures,” noted Vinod Nair, Head of Research at Geojit Financial Services.
Turning to the Bank Nifty, analysts highlight its proximity to the lower boundary of the ascending channel, positioned at 47200 – 47000. The 20-week average sits at 47244, providing multiple support levels that could mitigate further downside risks. Jatin Gedia, Technical Research Analyst at Sharekhan by BNP Paribas, observed, “The indices have been on a downward trajectory and are now approaching critical junctures, poised for potential reversals.”
Regarding currency markets, the rupee maintained stability, closing at 83.50. Initially, it showed marginal gains but relinquished them later in the session due to a sell-off in capital markets. Jateen Trivedi, Vice President of Research Analyst – Commodity and Currency at LKP Securities, commented, “The trading session witnessed sideways movements, lacking significant data on the dollar index. The rupee’s trading range is anticipated to remain between 83.25 and 83.70 in the near term.”