Sensex Crashes Nifty Below as Markets Slide Amid Geopolitical Tensions
Mumbai, November 28, 2024 – Indian stock markets experienced a sharp decline on Thursday, with benchmark indices plunging significantly due to escalating geopolitical tensions and heavy profit booking. The 30-share BSE Sensex fell over 1,300 points, closing at 79,073.69, while the broader NSE Nifty slipped below the crucial 23,900 mark, hitting a day’s low of 23,873.35.
The sell-off erased ₹82,000 crore in market capitalization across all listed companies on the BSE. Analysts attribute the decline to a combination of global factors, including geopolitical risks stemming from the Russia-Ukraine conflict, concerns over US Federal Trade Commission (FTC) actions against major tech companies, and domestic volatility linked to F&O (Futures & Options) expiry.
Key Contributors to the Market Fall
Geopolitical Tensions Impact Sentiment
Heightened geopolitical tensions, especially related to the ongoing Russia-Ukraine war, have created uncertainty in global financial markets. The conflict has led to increased volatility in commodity prices and dampened investor confidence, pushing global equities lower.
F&O Expiry Intensifies Volatility
As Thursday marked the expiry of F&O contracts, traders witnessed heightened volatility, which added pressure on Indian markets. Analysts noted that technical indicators had turned bearish, with Nifty nearing critical support levels.
Prashanth Tapse of Mehta Equities commented:
A closing below 23,800 would indicate further weakness in the Nifty, whereas 24,350 stands as a significant resistance level. The markets are expected to stay within a range, exhibiting a negative bias, until a decisive breakout occurs in either direction.
IT Stocks Under Pressure
Indian IT stocks were among the worst hit, following a significant correction in US tech shares amid regulatory scrutiny. The U.S. Federal Trade Commission has initiated an antitrust investigation targeting Microsoft, with a particular focus on its cloud computing, cybersecurity, and artificial intelligence sectors.
- Infosys: Dropped over 3.5%, contributing significantly to the Nifty’s decline.
- TCS: Another major loser, also dragging down the Nifty IT index.
The selling pressure in IT stocks was attributed to profit booking, as these stocks have rallied strongly in recent weeks, leaving them vulnerable to global tech sector headwinds.
Profit Booking in Banking and Auto Sectors
Heavyweights in the banking and auto sectors also witnessed significant selling. These sectors had seen substantial gains in the run-up to recent events, including the Maharashtra election outcome, and were now undergoing profit booking.
Adani Group Stocks Offer a Bright Spot
Amid the broader market decline, Adani Group stocks emerged as outliers, rallying by as much as 10%. This followed a clarification from the conglomerate that its executives were not implicated in violations of the US Foreign Corrupt Practices Act.
Anirudh Garg of Invasset PMS noted:
The clarification from Adani was pivotal in stabilizing the market sentiment surrounding the group. Although the general market is still in a correction phase, the robustness of Adani stocks may provide a foundation for a wider market recovery.
Market Snapshot: Key Indices and Movers
| Index | Close | Change |
|---|---|---|
| Sensex | 79,073.69 | -1,300 points (-1.61%) |
| Nifty 50 | 23,873.35 | -400 points (-1.65%) |
| BSE Market Cap | ₹260.18 lakh crore | -₹82,000 crore |
Top Nifty Losers
- Infosys (-3.5%)
- TCS (-3.2%)
- ICICI Bank (-2.9%)
- Maruti Suzuki (-2.5%)
Top Nifty Gainers
- Adani Enterprises (+10%)
- Adani Ports (+8.5%)
Technical Outlook: Nifty at Critical Juncture
Technical analysts have flagged the Nifty’s close proximity to the critical support level of 23,800. A sustained break below this mark could open the door to further downside, while resistance at 24,350 remains formidable.
- Support Level: 23,800
- Resistance Level: 24,350
Market experts suggest that traders should tread cautiously, as the indices may remain range-bound with a negative bias in the near term.
Global Cues Weigh on Domestic Markets
1. US Tech Under Scrutiny
The US FTC’s antitrust investigation into Microsoft has sent ripples across global IT stocks. Indian IT companies, with significant exposure to global markets, are feeling the heat as investors reassess growth prospects in light of increased regulatory scrutiny.
2. Geopolitical Risks
Rising tensions in Eastern Europe have led to fluctuations in global oil and commodity prices, creating additional headwinds for emerging markets like India.
3. Interest Rate Concerns
Investors remain wary of potential interest rate hikes by global central banks, including the US Federal Reserve. Higher rates could impact liquidity and dampen growth prospects, particularly in high-growth sectors like technology and banking.
Investor Sentiment: Mixed Signals
Investor sentiment remains cautious, with analysts divided on whether the current downturn represents a temporary correction or a more prolonged bearish phase.
While the markets are undergoing a correction, the broader trend is still bullish,” stated Ramesh Iyer, a market analyst. “This market pullback could represent a buying opportunity for investors with a long-term perspective.
Key Takeaways for Investors
- Volatility Ahead: With geopolitical tensions and regulatory developments abroad, markets are likely to remain volatile in the near term.
- Sectoral Rotation: Defensive sectors like FMCG and pharmaceuticals may outperform as investors shift focus amid profit booking in high-beta sectors.
- Technical Levels: Watch for Nifty’s movement around the 23,800 and 24,350 levels for potential breakouts or further corrections.
What Lies Ahead?
As the markets digest Thursday’s sharp decline, the focus will shift to upcoming global and domestic cues:
- Geopolitical Developments: Any resolution or escalation in the Russia-Ukraine conflict will significantly impact sentiment.
- US FTC Investigations: Progress in the antitrust case against Microsoft could set the tone for IT stocks globally.
- Domestic Events: Investors will be closely monitoring upcoming data releases, including GDP growth figures and inflation numbers.
Thursday’s market crash underscores the fragility of investor sentiment amid heightened geopolitical and regulatory risks. While the downturn reflects a mix of global and domestic pressures, analysts remain cautiously optimistic about a recovery, particularly in the context of India’s long-term growth prospects.
For now, investors are advised to adopt a disciplined approach, focusing on sectors with robust fundamentals and clear growth trajectories. As markets navigate through these uncertain times, patience and prudence will be key to weathering the storm.
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