Share Market Falls: Indian stock markets once again witnessed a decline on Friday. With this, the bullish trend that had been going on in the market for the last two days was broken. Due to weak global signals and increasing uncertainties, the stock market remained in decline since early trading. This decline has come at a time when the market had touched its highest level in a year just a day earlier.
Around 10:30 am, the Sensex fell 390.62 points or 0.46 per cent to 85,242.06. At the same time, Nifty was trading at 26,067.85 with a weakness of 124.30 points or 0.47 percent. Shares of Hindalco, Tata Steel and Adani Port saw the biggest decline on Nifty.
There were 4 big reasons behind today’s decline in the stock market-
1. Weak signals from global markets
The biggest reason behind today’s fall in the stock market was the weakness of foreign markets. In Asian markets, Korea’s Kospi index fell more than 3 percent, while Japan’s Nikkei 225 also fell 2 percent. The markets of Shanghai and Hong Kong were also trading in the red. Moreover, US markets also showed weakness in the previous session, where Nasdaq fell 2.15 per cent, S&P 500 fell 1.56 per cent and Dow Jones closed down 0.84 per cent. Money markets also witnessed volatility, with the Japanese yen hovering near a 10-month low and the dollar continuing a strong trend.
2. Expectations of interest rate cut weakened
Expectations of interest rate cuts in America have also weakened. September employment data indicated that job growth had accelerated, reducing the chances of an interest rate cut in December. On the other hand, Federal Reserve Governor Lisa Cook did not clearly indicate any possible rate-cut in a statement on Thursday. Instead, he cited risks associated with private credit markets and hedge fund activities. This weakened the sentiment regarding investment in global emerging markets.
3. Selling in IT shares
Heavy selling was also seen in IT shares. Domestic IT stocks remained under pressure due to fall in US tech stocks and diminishing valuation appeal. US tech stocks fell dramatically on Thursday despite Nvidia’s better-than-expected results. This had a direct impact on the shares of Indian IT companies.
4. Rise in India VIX
India VIX index saw a jump on Friday, indicating increasing uncertainty in the stock market. The India VIX index rose 13 percent to 13.68, indicating that traders are expecting major fluctuations in the coming days. A rise in VIX is generally considered a sign of market nervousness.
Now what next?
Anand James, Chief Market Strategist, Geojit Financial Services, said Nifty breaking above the one-month trading range strengthens the possibility that the index may reach 26,550 in the near future. However, he also said that Nifty moving above the upper Bollinger Band on Thursday and then closing below it, indicates that the upside of the index may be limited.
James said that if Nifty fails to hold above 26,237 or slips below 26,160, the market may again tilt towards bears. In such a situation, there may be a possibility of Nifty falling to the level of 26,028–25,984.
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