In a week marked by turbulence and uncertainty, India's stock market indices, Nifty 50 and Sensex, faced a fifth consecutive session of decline, with investors losing a substantial ₹15 lakh crore over this period.
As the closing bell rang today, Nifty 50 recorded a 160-point drop, or a decrease of 0.83 percent, settling at 19,122.15. On the other hand, the Sensex ended today's trading at 64,049.06, marking a decrease of 523 points, which is approximately 0.81 percent less than its previous level.
The recent stock market drop happened for a few reasons. One of them is the conflict between Israel and Hamas, which is making the whole world uncertain. This conflict can impact how much we pay for crude oil, and if it gets worse, it could cause problems for global economy.
Additionally, less-than-enthusiastic Q2 earnings reports from companies and the rise in US Treasury yields have made investors feel uneasy about investing in riskier stocks. These factors, combined, contribute to the current negative trend in market.
The Nifty 50's performance today is indicative of the caution that has gripped the market. Investors are closely monitoring developments and are, understandably, adopting a more guarded approach, given the geopolitical heat-up, rising bond yields, fluctuations in the crude oil prices, and the technical confirmations of a Head and Shoulder breakdown in Nifty and a double top breakdown in Bank Nifty. In such an environment, a cautious approach seems prudent until there is greater clarity on the global front.
Shrikant Chouhan, Head of Equity Research (Retail) at Kotak Securities, highlights that the relatively high valuations of Indian stocks have been a concern for investors. The ongoing global turmoil is providing investors with an opportunity to reduce their equity exposure.
Vinod Nair, Head of Research at Geojit Financial Services, also underscores the impact of geopolitical tensions on investor sentiment. Although oil prices have fallen and the Q2 results season has seen optimism, the expectation of a continued higher interest rate scenario dampens the outlook for future growth. Despite these challenges, a positive sentiment can still be seen in large-cap stocks, while concerns over geopolitical tensions and valuations weigh on mid- and small-cap stocks.
From a technical perspective, Chouhan observes that Nifty has broken below the significant support level of 19,200 and formed a bearish candle on daily charts. Day traders should watch for the trend decider level at 19,050, as a move above this level may result in a brief pullback rally to 19,200-19,250. However, if 19,050 is breached, the market may see further declines toward 19,000-18,930.
Jatin Gedia, Technical Research Analyst at Sharekhan by BNP Paribas, adds that Nifty, on the daily charts, has reached the lower end of a falling channel and is close to the psychological level of 19,000. The short-term trend remains negative, with minor pullbacks facing selling pressure. While some consolidation is possible, it is expected to be temporary. On the downside, Nifty could decline toward 19,000, with immediate resistance at 19,350-19,370.
As this week unfolds, investors are being cautious and keeping a keen eye on how the stock market, the economy, and global events are developing. All these things can affect how well or poorly the market does. People who invest money and experts are keeping a close eye on how the stock market deals with these tough situations and whether it can bounce back.