Closing Bell: Nifty below 26,000, Sensex down over 500 points; Here are key factors fueling the market fall

Synopsis: Markets fell sharply amid a weak rupee, persistent FII selling, negative global cues, and volatility from weekly derivatives expiry, dragging Sensex and Nifty lower.

The Indian stock market has experienced a significant fall today, with both the Nifty 50 and Sensex showing a considerable decline. Investors and traders are closely watching the evolving global and domestic market conditions as they try to understand the reasons behind this Bearish market.a

In today’s session, both indices opened with a gap down, reflecting negative views from the start. As trading continued, selling pressure increased, causing a further decline in the indices. This led to a sharp intraday fall for both the Sensex and Nifty, highlighting the negative sentiment among market participants.

Index Overview  

The equity benchmark indices extended their losses for the session on Tuesday, as a combination of factors weighed on investor sentiment. The Nifty Index opened at 25,951.50, marking a gap-down opening from its previous close of 26,027.30, and fell by nearly 150 points from the previous close. Meanwhile, the Sensex Index opened at 85,025.61, representing a gap-down from its previous close of 85,213.36, but has since declined by almost 500 points from the previous close.

In the Nifty50 pack, Eternal, Axis Bank, HCL Tech, and Jio Financial were among the major laggards, declining up to 4 percent. Tata Consumer, Nestle India, and Bharti Airtel were among the gainers, rising up to 1.4  percent.

In the Sensex pack, Eternal, Axis Bank, HCL Tech, and Tata Steel were among the major laggards, declining up to 4.3 percent. Bharti Airtel, ITC, Asian Paints, and Titan were among the gainers, rising up to 1  percent.

Here are the reasons for the fall

The Indian rupee fell to its lowest level ever for the fourth day in a row on Tuesday. It weakened because demand for the US dollar remained strong and foreign investors continued to pull money out of Indian markets. 

The rupee dropped to 90.82 against the dollar, lower than Monday’s record of 90.7875. A weaker rupee usually worries investors because it can lead to more money leaving the country and can push up inflation, which negatively affects stock markets.

Foreign institutional investors sold shares worth Rs. 1,468.32 crore on Monday, extending their selling streak to twelve days in a row. When foreign investors keep pulling money out of the market, it reduces available funds and weakens investor confidence. This ongoing selling pressure usually has a negative impact on stock markets.

Global markets were weak, which affected the overall investor mood, and the US stock market futures were down by up to 1% in the morning, indicating a weak opening for Wall Street, and it had already closed lower on Monday. 

Asian markets also traded lower, including South Korea’s Kospi, Japan’s Nikkei 225, China’s Shanghai Composite, and Hong Kong’s Hang Seng, as these weak global markets often put pressure on local stock markets as well.

Investors were cautious as they waited for the US jobs data for November, which was scheduled to be released later in the day. This report is important because it gives clues about future US interest rates.  These changes in US interest rates can affect the flow of money across global markets, including investments in emerging markets like India.

Nifty derivatives’ weekly expiry day is on Tuesday. On such days, traders adjust or close their positions, which often leads to higher market swings and increased volatility. This increased activity can cause sudden price movements in stocks and indices, even without any major news or fundamental changes.

From a technical viewpoint, the Nifty index is currently trading around 25,900. The support is seen at the 25,750 level, and if it continues to fall, it could decline further to 25,400. On the resistance side, the immediate resistance is at 26,000, with the next resistance around 26,300.

The Sensex index is currently trading around 84,750. The support is seen at the 84,385 level, and if it continues to fall, it could decline further to 83,145. On the resistance side, the immediate resistance is at 85,050 near the day’s high, with the next resistance around 85,330.

Written by Sridhar J

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