In Short
- Sensex plummets 900 points, and the Nifty50 falls more than 1%.
- Sensex’s critical support level is at 24,850; more falls could occur.
- major industries falling; Hardest hit were Reliance, SBI, and ICICI Bank.
Friday saw a severe decline in domestic stock markets, with the NSE Nifty50 falling more than 1% and the BSE Sensex plunging over 900 points.
In the middle of the morning, the Nifty50 had dropped to 24,889, while the Sensex was trading at about 81,317.
According to Santosh Meena, Head of Research at Swastika Investmart Ltd., the sharp decline follows a period of stability for the Indian markets at record highs.
Investor anxiety ahead of the US non-farm payrolls report, which is anticipated later today, is partially responsible for the market instability of today.
“One key factor could be weaker job data from the USA, fuelling concerns about a potential global economic slowdown,” he said.
165,000 more jobs will be created, according to analysts, and the unemployment rate will fall to 4.2%. But worries about fewer job opportunities and the possibility of a Federal Reserve rate drop have increased market ambiguity.
“The Fed might cut rates by 50 basis points if the August jobs data falls short of expectations and unemployment rises,” said Dr. V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services. This may cause additional market anxiety, particularly in light of possible slowdown worries.
Furthermore, India now has a higher weight than China in the MSCI Emerging Markets index—a record high.
“This raises the risk of a strategic reduction in weight allocation, especially given India’s relatively high valuations,” Meena added.
Technical analysis
Furthermore, India now has a higher weight than China in the MSCI Emerging Markets index—a record high.
“This raises the risk of a strategic reduction in weight allocation, especially given India’s relatively high valuations,” Meena added.
Impact by sector
Every sector was impacted by the general market slump. Reliance Industries, SBI, ICICI Bank, and Infosys were a few of the major firms that contributed most to the decline.
A number of sector-specific indices experienced declines of more than 2%, including Nifty PSU Bank and Oil & Gas, and more than 1% in Auto, Media, and Metal. Additionally, there were losses in small- and mid-cap stocks, falling by 0.9% and 1.3%, respectively.
Global outlook
While Japan’s Nikkei suffered a small decline, the MSCI Asia-Pacific index saw a minor rise of 0.2% globally. US futures displayed decreases as well. Foreign institutional investors (FIIs) sold ₹688 crore worth of stocks in the domestic market, while domestic institutional investors (DIIs) purchased equities valued at ₹2,970 crore.
With Brent crude at $72.7 and US West Texas Intermediate at $69.16, oil prices stayed stable. With respect to the US dollar, the Indian rupee increased little, trading at ₹83.9350.
The state of the market today is a result of a combination of domestic and international forces influencing investor mood.
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