The stock market took a sharp downturn on Monday, driven by weak global signals. Concerns about a potential recession in the US and growing tensions in the Middle East have led to a broad sell-off.
At 9:40 am, the S&P BSE Sensex had dropped 1713.28 points to 79,268.67, while the NSE Nifty50 fell 513.30 points, trading at 24,204.40. Most other market indices also declined, with small-cap and mid-cap stocks experiencing similar losses. Investor wealth declined by ₹10.24 lakh crore, with the market valuation dropping to ₹446.92 lakh crore from the previous session’s ₹457.16 lakh crore.
The global market is facing a tough time due to a mix of negative factors. The initial trouble came from fears of a reverse yen carry trade following an interest rate hike in Japan. This was exacerbated by disappointing job data in the US, which raised worries about a potential recession. China and Europe are also dealing with economic slowdowns, and ongoing geopolitical tensions are adding to the strain on markets.
We are witnessing signs of the first meaningful correction in global markets after an extended bull run. Investors and traders should be cautious and avoid rushing in immediately, as better entry levels may emerge. The outlook for our market remains very bullish, but the potential for a significant correction means investors should consider taking profits where valuation concerns exist.
Several regional equity indexes faced significant declines, with Japan and the tech-focused markets of Taiwan and Korea experiencing the heaviest losses, each seeing their benchmarks drop by more than 7%.
This sell-off is more of a short-term volatility driven by profit booking and is no indicator of any long-term panic mode in Indian equities. For investors looking to enter the equity market, a staggered entry during volatile periods can be considered.
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Nifty is expected to open below the 24,400 level, which has been a strong support for the index. The Nifty index is experiencing challenges in moving higher and is returning to its previous trading range. The RSI, a momentum indicator, is currently above the midpoint but trending downward, suggesting that the momentum is neutral to slightly positive. There is strong support at the 21-day Exponential Moving Average (EMA). If the price falls below this 21-day EMA, it could indicate a shift towards a more negative outlook.