Share Market Fall: Indian stock markets witnessed a decline for the second consecutive day on Tuesday, 16 December. Sensex fell by 500 points in early trade. Whereas Nifty fell below 25,900. Investors’ morale weakened due to continuous selling by foreign investors, rupee reaching record low and weak global cues. BSE Midcap and Smallcap indices also fell up to 0.62 per cent. The biggest decline was seen in IT, banking and metal stocks.
Around 10 am, BSE Sensex was trading at 84,722.56, down 490.80 points or 0.58 per cent. Meanwhile, NSE Nifty fell 145.90 points or 0.56 percent to 25,881.40. Axis Bank, Eternal and JSW Steel were the biggest losers on Nifty and saw a fall of up to 4 percent.
There were 5 big reasons behind today’s decline in the stock market-
1. Rupee at record low level
The biggest pressure on the stock market came from the weakness of the rupee. The rupee fell 9 paise to a record low of 90.87 against the US dollar in early trade on Tuesday. The currency remains under pressure due to continued selling by foreign institutional investors and no signs of any concrete progress on the India-US trade agreement. However, due to weakening of the US dollar and fall in crude oil prices, further major decline in the rupee seemed to have stopped.
2. Continuous selling by foreign investors
Continuous selling by foreign institutional investors (FIIs) also remains a major reason for the weakness of the market. On Monday, foreign investors withdrew Rs 1,468.32 crore from the Indian stock market. This is the 12th consecutive trading day when foreign investors remained net sellers. So far in the month of December, foreign investors have withdrawn about Rs 21,073 crore from the stock market.
3. Weak global signal
Didn’t get much support from global markets today either. Wall Street futures were trading 1 percent lower by around 9:30 am Indian time. This indicated a weak start for the US markets. Earlier on Monday also the American stock markets had closed with a decline. In Asian markets, South Korea’s Kospi, Japan’s Nikkei 225, China’s Shanghai Composite and Hong Kong’s Hang Seng index were seen trading in the red.
4. Waiting for America’s jobs data
Investors also appeared cautious about America’s important employment data. There remains uncertainty regarding the jobs data for the month of November, as these figures may indicate the direction of US interest rates. Possible changes in US rates also impact the flow of foreign investment in emerging countries. In such a situation, investors seemed to be avoiding taking risks at the moment.
5. Movement due to weekly expiry
Apart from this, there was also weekly expiry of Nifty derivatives on Tuesday, due to which the volatility in the market increased. Due to position adjustments by traders on the expiry day, volatility is often seen and this also impacts the market movements.
What do technical experts say?
According to Anand James, Chief Market Strategist, Geojit Investments, there is still upside potential in the market, but caution is necessary at the current levels. He said that Nifty is currently near the upper end of the falling trendline, from where pressure may arise again. According to him, in the initial trade, consolidation may be seen in the range of 26,000 to 25,970, after which there may be an attempt to move upwards, but there is a need to keep a special eye on the level of 25,900.
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