Since reaching its all-time high of 85,978.25 on September 27, 2024, the Sensex has dropped 12.5%, for a total decrease of 10,802 points. Since October 2024, FIIs have been selling consistently in an effort to find possibilities in more affordable markets, which has contributed to this decrease.
Due to negative global cues, the Indian stock market extended its downward trend on Friday for the fourth straight day. Heavy selling in auto, pharmaceutical, banking, and FMCG industries caused the benchmark indices, the Sensex and Nifty 50, to drop more than 0.5% on February 21.The 30-share BSE Sensex hit an intraday low of 75,175.97, down 560 points. In 12 of the last 13 sessions, the index has lost money, dropping more than 3,400 points, or more than 4%, in the process.
Interestingly, the Sensex has dropped 12.5% from its peak of 85,978.25 on September 27, 2024, for a total decrease of 10,802 points. Foreign institutional investors (FIIs) have been selling since October 2024 in an effort to find possibilities in more affordable countries, which has been blamed for this fall.
The market collapse has also been exacerbated by indicators of weakening domestic economic growth, global geopolitical uncertainty, and poor corporate results.
Global financial markets have also been volatile due to US President Donald Trump's recent warnings of greater import tariffs.
Market Attitude Despite Tariff Fears
"The market is reacting negatively to possible tariff targets, such as pharmaceuticals and automobiles, in light of Trump's tariff threats, and is searching for opportunities in domestic consumption plays that will not be impacted by tariff threats." Given Trump's policy of threatening tariffs and then negotiating a drop in taxes on US exports, this is probably a short-term trend. "This will take time to unfold," stated Dr. V K Vijayakumar, Geojit Financial Services' Chief Investment Strategist.
He added that the US does not benefit from higher import duties since they will cause inflation and encourage hawkish remarks from the Fed, which will affect the US stock market. Trump is utilizing the interim time to bargain with trading partners because he will not like this result.
Vijayakumar also anticipates that FII selling in India will continue, especially given the resurgence of interest in inexpensive Chinese stocks that are making a smart comeback.
"The pressure on largecaps will continue due to FII selling." Long-term investors can take advantage of this opportunity. Buying is anticipated to occur for certain midcaps, such as those in the defense industry, that have corrected and are now fairly valued since they don’t face the threat of FII selling,” said Vijayakumar.
The market collapse has also been exacerbated by indicators of weakening domestic economic growth, global geopolitical uncertainty, and poor corporate results.
Global financial markets have also been volatile due to US President Donald Trump's recent warnings of greater import tariffs.
Market Attitude Despite Tariff Fears
"The market is reacting negatively to possible tariff targets, such as pharmaceuticals and automobiles, in light of Trump's tariff threats, and is searching for opportunities in domestic consumption plays that will not be impacted by tariff threats." Given Trump's policy of threatening tariffs and then negotiating a drop in taxes on US exports, this is probably a short-term trend. "This will take time to unfold," stated Dr. V K Vijayakumar, Geojit Financial Services' Chief Investment Strategist.
He added that the US does not benefit from higher import duties since they will cause inflation and encourage hawkish remarks from the Fed, which will affect the US stock market. Trump is utilizing the interim time to bargain with trading partners because he will not like this result.
Vijayakumar also anticipates that FII selling in India will continue, especially given the resurgence of interest in inexpensive Chinese stocks that are making a smart comeback.
"The pressure on largecaps will continue due to FII selling." Long-term investors can take advantage of this opportunity. Buying is anticipated to occur for certain midcaps, such as those in the defense industry, that have corrected and are now fairly valued since they don’t face the threat of FII selling,” said Vijayakumar.
Important Sensex Components Fueling the Decline
The decline of the Sensex in recent months has been mostly attributed to a number of heavyweight stocks:
The share price of Tata Motors has dropped more than 36% over the last six months and is currently 43% below its 52-week peak, making it the worst-performing Sensex participant.
Asian Paints: The stock price of Asian Paints is currently down more than 34% from its 52-week high, having fallen more than 28% in the last six months.
Adani Ports & SEZ: The stock of the Adani Group is currently 32% below its 52-week high and has produced negative returns of more than 25% in the last six months.
IndusInd Bank: The private lender's stock has dropped 34% from its 52-week peak and 24.55% in just six months.
PowerGrid Corporation of India: PSU's stock is currently 29% below its 52-week high after dropping 21% during the last six months.
Market players are keeping a careful eye on corporate earnings and geopolitical developments in anticipation of more cues due to the ongoing FII outflows and global uncertainty.
Outlook for the Sensex
The Sensex broke through the crucial technical support level of 75,500 on Friday; 75,200 is currently the next significant support level.
The decline of the Sensex in recent months has been mostly attributed to a number of heavyweight stocks:
The share price of Tata Motors has dropped more than 36% over the last six months and is currently 43% below its 52-week peak, making it the worst-performing Sensex participant.
Asian Paints: The stock price of Asian Paints is currently down more than 34% from its 52-week high, having fallen more than 28% in the last six months.
Adani Ports & SEZ: The stock of the Adani Group is currently 32% below its 52-week high and has produced negative returns of more than 25% in the last six months.
IndusInd Bank: The private lender's stock has dropped 34% from its 52-week peak and 24.55% in just six months.
PowerGrid Corporation of India: PSU's stock is currently 29% below its 52-week high after dropping 21% during the last six months.
Market players are keeping a careful eye on corporate earnings and geopolitical developments in anticipation of more cues due to the ongoing FII outflows and global uncertainty.
Outlook for the Sensex
The Sensex broke through the crucial technical support level of 75,500 on Friday; 75,200 is currently the next significant support level.
0 Comments