Share Market Down: Indian stock markets witnessed sharp fluctuations on Monday 29 December. Both Sensex and Nifty lost their initial gains and fell. Sensex fell nearly 400 points from the day’s high. Whereas Nifty fell near 26000. Continuous selling by foreign investors and rise in crude oil prices have put pressure on the market. At the beginning of trading, the Sensex had risen 209 points or 0.24 percent to reach the level of 85,250. Whereas Nifty increased by 64.5 points to the level of 26,106.80. However, this momentum could not last long.
At around 11:30 am, the Sensex traded at 84,763.91, down nearly 500 points from the day’s high, down 277.55 points or 0.33 per cent. Nifty fell by 75.35 points or 0.29 percent to 25,966.95. BSE midcap and smallcap indices also fell up to 0.35 per cent. The biggest decline was seen in IT, banking, power and realty stocks.
There were 5 important reasons behind today’s decline in the stock market-
1. Low trading volume at the end of the year
Investors appeared cautious due to low trading volume in the last days of the year. The average daily trading volume of Nifty-50 in December was around 25 crore shares, which is less than the level of 30 crore shares in November. Akash Shah, Research Analyst, Choice Broking, said that at the end of the year, market participation is usually low due to holidays, due to which the trading volume decreases and the market movement remains sluggish.
2. Continuous selling by foreign investors
Foreign institutional investors (FIIs) sold shares worth Rs 317.56 crore on Friday. This was the fourth consecutive day of net selling by FIIs. This continuous selling weakened the morale of investors and put brakes on any major rise in domestic stocks.
3. Rise in crude oil prices
A rise in crude oil prices was seen in the international market. The price of Brent crude oil rose 1.04 percent to $ 61.27 per barrel. Due to the cost of crude oil, India’s import bill increases and the concern about inflation also increases, which has a negative impact on the stock market.
4. Weakening of global signals
US stock markets closed flat on Friday, while US futures were also trading sluggish on Monday morning (Indian time), indicating a weak start in overseas markets. In Asian markets, Japan’s Nikkei 225 index was also seen trading with a decline.
VK Vijayakumar, Chief Market Strategist, Geojit Investments Ltd, said that a strong rally in the market needs a big trigger, such as a trade agreement between India and the US. There is no clarity on this at present. In such a situation, there is a possibility of consolidation in the market in the near future. He says investors can use this consolidation phase to gradually invest in good quality stocks, especially largecap stocks.
5. Fall in rupee
The Indian rupee fell 5 paise to 89.95 against the US dollar in early trade on Monday. Selling by foreign investors and weak start of the stock market also had an impact on the rupee. Earlier on Friday also a fall of 19 paise was seen in the rupee.
What do technical experts say?
According to Anand James, Chief Market Strategist, Geojit Investments Limited, Nifty is currently trading close to its 20-day simple moving average.
He said that initially a slight recovery may be seen, but to confirm the strength, it is necessary for Nifty to go above 26,127–26,150. If Nifty fails to hold the levels of 26,050–26,077, it may witness further decline and slip to 25,935–25,850. If necessary, levels of 25,740–25,650 can also be seen, although today the probability of this is less.
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