5 key factors driven the market down

A day after snapping their multi-day losing streak, Indian stock market benchmarks- the Sensex and the Nifty 50- resumed their downward march on Thursday, November 21, amid weak global cues. The domestic market witnessed a broad selloff as mid and small-cap segments also suffered losses.

 Both key indices had clocked modest gains in the previous session on Tuesday. However, they resumed their downward march on Thursday on lingering concerns over weak earnings, geopolitical tensions, and stretched valuation. The US indictment of Adani Group Chairman Gautam Adani and other senior executives on bribery charges dealt a fresh blow to sentiment.

Let’s take a look at the key factors behind the market selloff.

1.⁠ ⁠The Adani saga

Several Adani Group shares hit their lower circuits in early trade on Thursday after Gautam Adani was indicted in New York over his role in an alleged multibillion-dollar bribery and fraud scheme.

2.⁠ ⁠Concerns over weak Q2 earnings

Q2 earnings came out significantly weak. The July-September quarter numbers of the majority of companies disappointed markets.

Global cyclicals, such as oil and gas, along with metals, cement, chemicals, and consumers, weighed on earnings growth. Consumption has emerged as a weak spot, while select segments of BFSI are experiencing asset-quality stress. Weakness in government spending has also been one of the factors driving moderation in earnings.

3. Escalating geopolitical tensions

Fresh escalation in the Russia-Ukraine war has soured the market mood further. Russian President Vladimir Putin signed a revised nuclear doctrine on Tuesday, days after the US allowed Ukrainian use of longer-range missiles against Moscow.

4.⁠ ⁠Heavy foreign capital outflow
Foreign portfolio investors (FPIs) have been relentlessly selling Indian equities, which has been among the key reasons behind the recent market downtrend.

According to NSDL data, FPIs sold Indian stocks worth ₹94,017 crore in October, and they sold stock for an additional ₹25,942 crore in November till the 19th.

5.⁠ ⁠Technical factors
Nifty 50 is trading below its 200-day moving average of 23,575. The market structure is weak and the 23,100-22,800 levels are crucial.

 

India’s GDP bombshell is seen to be making stock market issues worse.

Analysts caution that the economic slowdown in India, which has seen the worst growth in almost two years, might exacerbate the short-term weakness of the stock market. The Nifty50 has down 8% since September because to high valuations and worries about the economy, even if a recovery is anticipated in the second half of the fiscal year, contingent on possible RBI rate reduction or relaxation of deposit requirements. In November, foreign investors pulled out $2.6 billion.

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Indian benchmark indices BSE Sensex and Nifty 50 were trading higher on Friday.

At 2 PM, the BSE Sensex was at 78,657, up 1,501 points, or 1.95 per cent, while the Nifty 50 was at 23,793, up 443 points, or 1.9 per cent.

After opening bell, 20 out of the 30 stocks on the BSE Sensex were trading higher, with gains of up to 1.17 per cent, led by SBI, followed by ICICI Bank, Tata Motors, IndusInd Bank, and Tech Mahindra. Among the top drags were Adani Ports & SEZ (down 3.28 per cent), followed by TCS, ITC, Titan, and Nestle India.

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5 key factors driven the market down

A day after snapping their multi-day losing streak, Indian stock market benchmarks- the Sensex and the Nifty 50- resumed their downward march on Thursday, November 21, amid weak global cues.

The domestic market witnessed a broad selloff as mid and small-cap segments also suffered losses.

Read More »