Stock Market

Share Market Down: Indian stock markets witnessed a decline for the third consecutive day on Tuesday, December 2. Selling by foreign investors, weakness in the rupee and profit-booking in banking stocks weakened investor sentiment.

The Sensex fell by nearly 600 points during trading. At the same time, Nifty plunged by more than 170 points and went below 26,000. Today’s decline was all-round. Indices of midcap and smallcap stocks also remained in the red. The biggest decline was seen in banking and financial services shares.

At the end of trading, BSE Sensex fell 503.63 points or 0.69 per cent to close at 85,138.27. Nifty fell 143.55 points or 0.55 percent and closed at 26,032.20.

There were 4 big reasons behind today’s decline in the stock market-

1. Weakness in rupee

First of all, the weakness of the rupee raised concerns. The Indian rupee opened at 89.70 against the dollar on Tuesday and later fell to a record low of 89.92 during trade. Traders say that the rupee has weakened due to strong demand for dollar, rise in crude oil prices and selling by foreign investors.

2. Continuous selling by foreign investors

Foreign institutional investors (FIIs) sold Rs 1,171 crore on Monday. This is the third consecutive day when foreign investors have withdrawn money from the stock market. Earlier in November, foreign investors sold a total of Rs 17,500 crore. Market experts say that investors are avoiding taking risks at higher levels.

“The lack of sustained buying interest near record highs for four sessions suggests a possible pause in market momentum,” Osho Krishna, chief manager of technical and derivatives research at Angel One, told Reuters.

Nilesh Jain, Head of Technical and Derivatives Research, Equities, Centrum Broking, said that the consolidation near the record high level also shows that investors are not chasing the index at higher levels and they are waiting for a slight decline before taking new positions.

3. Weak signals from global markets

Weak signals in global markets also increased caution on Dalal Street. In Asian markets, major indices like Shanghai Composite were in the red. At the same time, American stock markets also closed with a decline on Monday.

4. Fall in banking shares

The Nifty Private Bank index fell by about 0.4 per cent during trading today. HDFC Bank and ICICI Bank were the biggest losers. This decline in banking shares was also seen because there has been a change in the weightage of Nifty Bank Index. In fact, some time ago SEBI had asked NSE to reduce the weightage of major stocks in the indices on which futures contracts are available. Bank Nifty is also included in this. According to SEBI guidelines, now the maximum weightage of top-3 shares of the index has been increased to 19%, 14% and 10% respectively.

What signals are coming from technical charts?

The market currently appears to be under pressure even on the technical charts. Anand James, Chief Market Strategist, Geojit Financial Services, said there was a lack of momentum in Monday’s trade and the index slipped towards lower levels. He says that if Nifty is successful in returning to the range of 26,110 to 26,060, then the uptrend may return again. If this range is broken then the possibility of Nifty slipping to 25,860–25,700 will increase, although the possibility of a big fall to 25,300 is less at present.

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