The Indian benchmark indices opened in deep red losing more than a percent each. The Sensex tumbled over 900 points while Nifty fell below its 200-DMA, leaving investors poorer by Rs 3 lakh crore. All Nifty sectoral indices were in the red on Friday morning.
On Thursday too, Sensex had shed around 550 points that means the 30-stock index has shed to the tune of 1,450 pints in two straight sessions.
Why is Stock Market Falling Today?
Weak Global Cues
In Asia, markets in Hong Kong, Shanghai, Tokyo and Seoul declined following losses in US shares. Hong Kong’s Hang Seng dropped by 2.45 per cent, South Korea’s Kospi by 1.21 per cent, Shanghai by 1.15 per cent, Japan’s Nikkei by 1.36 per cent.
In the US, the S&P 500 tumbled 1.8 per cent, The Dow Jones Industrial Average shed 1.7 per cent and the Nasdaq composite fell 2.1 per cent as investors remain anxious about the prospect of more aggressive action by the Federal Reserve to fight inflation with higher interest rates, reported PTI.
“India’s markets have taken a significant hit as a result of weak global cues. The US market was under pressure due to the decline in shares of SVB bank and cryptocurrency financier Silver Capital, particularly in stocks related to banking and finance. We lack direction and are currently under selling pressure at higher levels as a result of the extremely volatile global cues over a long period of time,” said Santosh Meena, Head of Research, Swastika Investmart.
“The most recent issue is more US-specific, and there is only an sentimental influence on markets worldwide. Nevertheless, the market may stay volatile in the lead-up to US job data released today and US CPI figures released next week,” he added.
SVB Shares Collapse 60%
Shares of American bank SVB Financial Group, which invests in early-stage startups, collapsed 60% and wiped out over $80 billion worth of market capitalisation amid concerns over its financial stability. Although it is a US-specific issue, the rout is having a spillover effect on not just other Wall Street stocks but across the globe.
FIIs turn net sellers
As per NSE data, foreign institutional investors (FIIs) buying value stood at Rs 7,570.52 crore in Indian equities on Thursday, while the selling value came in at Rs 8,132.30 crore. Taking this into consideration, overall FII outflow was at Rs 561.78 crore during the day.
Fed Fear
Markets are currently pricing in a 78 per cent probability of a 50 basis points (bps) rate hike by the US Fed in its March 21-22 meeting. Investors awaited Friday’s February employment data that could help decide how large an interest rate hike the US Fed will impose at its next meeting in two weeks.
Rupee
The rupee depreciated by 8 paise to 82.14 against the US dollar in early trade today. The dollar index, which gauges the greenback’s strength against a basket of six currencies, was trading above the 105 mark.
Nifty Technical
On the daily chart, the Nifty on Thursday developed a Bearish Engulfing pattern and further bearishness will be confirmed if the Nifty closes in the red today. Nifty’s pivotal levels to watch are support at 17,350 and the 200 EMA at 17,684, said Ameya Ranadive, Equity Research Analyst at Choice Broking.
Bank Nifty
Parth Nyati, Founder, Tradingo, said: “Banknifty is facing resistance at the 50-DMA, placed around 41,650. It is trading below the 20-DMA of 40,950, where 40,450 is the next support level. 40,000 is a critical demand zone for any major weakness.”
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