Stock market today: Sensex crashes 900 points, Nifty 50 below 24,200; Why is market is falling?

Indian stock market indices declined a percent each on Wednesday dragged by profit booking at higher levels. The Sensex crashed more than 900 points to fall below 79,600 level, while the Nifty 50 tanked more than 200 points to slip below 24,200.

Sensex hit an intraday low of 79,435.76, falling 915.88 points, while the Nifty 50 touched a low of 24,141.80, down 291 points. The benchmark Nifty 50 hit a record high of 24,461.05 in the opening trade today.

Bank Nifty index also traded nearly 1% lower. The index declined 491 points to hit a low of 52,077.90.

All the sectoral indices were trading in the red, with Nifty Auto, Nifty PSU Bank, Nifty IT and Nifty Oil & Gas indices falling the most. Selling intensified in the broader markets as well. The Nifty Smallcap 100 and the Nifty Midcap 100 indices were down over 1.5% each.

The benchmark equity indices, Sensex and Nifty 50, hit their record highs on Tuesday. However, profit booking at higher levels amid concerns over stretched valuations, cautiousness ahead of Q1 results and mixed global market cues weighed on investor sentiment.

“Investors should be careful about the high level of speculative activity in the Smallcap space where operators are driving up the prices of many shares with low floating stock,” said V K Vijayakumar, Chief Investment Strategist, Geojit Financial Services.

On the technical front, Nifty breached a major downside support of 24,300 level.

Shrey Jain Founder and CEO SAS Online noted the continued underperformance of Bank Nifty relative to Nifty.

“For today’s weekly expiry, we expect Bank Nifty to consolidate around the 52,500 level, However, a pullback towards 52,250 could present a buying opportunity. We can await any directional move that may arise from news events. A decisive break in either direction is likely to lead to trending moves,” said Jain.

Here are key reasons why stock market is falling today:

China’s consumer price inflation rose by 0.2% in June from a year ago, while producer prices dropped by 0.8% from a year ago, in line with expectations. Japan’s wholesale inflation accelerated by 2.9% in June from a year earlier.

Powell said a rate cut is not appropriate until the Fed gains “greater confidence” that inflation is headed toward the 2% target.

“We are well aware that we now face two-sided risks,” and can no longer focus solely on inflation that nevertheless still “remains above” the central bank’s 2% target, Powell told the Senate Banking committee.

According to analysts, CPI inflation is likely to edge up to 5% in June from 4.75% in May due to rising food prices, primarily on account of high vegetable prices. Core CPI inflation is seen bottoming out, but it is likely to remain muted at 3.2% in June.

The brokerage firm estimates EPS (earnings per share) of the Sensex index at ₹3,521 for FY25 and ₹4,063 for FY26. It expects the Nifty 50’s EPS at ₹1,093 and ₹1,249 for FY25 and FY26, respectively.

“Therefore, we advise against aggressive long positions. Key levels to watch are 24,600 – 24,650, the golden ratio retracement of the panic fall seen during the election day results. On the downside, immediate support is at 24,330 followed by 24,160,” he said.

Defensive sectors like FMCG and Pharma have been favored in recent sessions, and Auto stocks have also shown strength. Bhosale advises traders to focus on these areas for better momentum and risk-reward compared to the main indices.

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.

First Published:

10 Jul 2024, 11:07 AM IST