The decline in the stock market is showing no signs of stopping. Nifty 50 kept slipping below the important level of around 23,500 during trading today. It had reached 23,503 in the day’s trading. Sensex also closed at 77,620 with a fall of 528 points today. The market appeared to be in panic due to continuous selling by foreign investors and just before the start of the quarterly results season. In such a situation, the fear intensified that could Nifty slip below 22,000 before there is any solid recovery in the market?
Market experts say that Nifty had gone into its correction zone in November itself. It has also fallen by more than 10% from its recent peak. After a fall of 10%, it is believed that the indices have now technically entered the correction zone. This is only the second time since the Covid period of March 2020 that Nifty has fallen to this level. Now, we talked to some technical experts about what investors should do at this critical juncture.
Vikas Jain, Head Research Analyst, Reliance Securities, said that if Nifty is not able to maintain the support level of 23,200, then it may fall further. Jain said any fall below 23,200 could pull Nifty to the range of 21,800-21,500.
At the same time, Vatsal Bhuva, technical analyst of LKP Securities, said that Nifty has closed above the level of 23,500 today. This is a strong support level for it. This has formed a bearish candlestick below the 200-day EMA on the charts, which is a signal for caution. He said that if the level of 23500 is broken then further decline may occur. Whereas 23,800 can act as resistance for this. If Nifty crosses the level of 23,800 in the next few days, then new momentum may come in the market again.
Why is the decline in the stock market not stopping?
Now let us come to why the decline in the stock market is not stopping. Market experts say that the biggest reason behind this is concerns related to earnings growth. The earnings season officially started from today with the announcement of Tata Consultancy Services (TCS) results. Earlier in the last quarter, the performance of Indian companies and especially the companies included in Nifty was the weakest in the last 4 years. Dr. VK Vijayakumar, Chief Investment Strategist, Geojit Financial Services, said that a nervousness is being seen in the market before the quarterly results. Q3 results season begins today and the market will now react to corporate performance.
Sanjeev Hota of Mirae Asset Sharekhan said that so far there is no indication that the results of the companies included in Nifty-50 will be better than the previous quarter. Due to this, investors are very cautious. Apart from this, there is pressure on the market due to uncertainty regarding Trump’s policies and concerns about lower than expected cut in interest rates by the Federal Reserve.
According to a CNN report, if President Trump assumes power, he may impose 10 percent duty on global imports and about 60 percent duty on Chinese goods. To ensure that no one objects to these duties, they can declare a National Economic Emergency in America. Federal Reserve officials believe that due to this, inflation related concerns may return again in America.
Due to this, expectations of aggressive interest rate cuts from the Federal Reserve have reduced. The stock market is now predicting only one cut of 0.25 percent in 2025. The chances of a second cut have become quite weak. This is another big reason for concern for the stock market.
Amidst all this, foreign investors have continued to withdraw money from the Indian market. FIIs sold shares worth Rs 3,362.18 crore on Wednesday. In January alone, FIIs have so far sold shares worth Rs 10,419 crore. All these factors together are creating pressure on the market.
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