Why is the Market Falling Today? Domestic markets inched lower in Friday’s intra-day trade amid weak global cues. In early trading hours today, Sensex tumbled over 750 points or 1 per cent to around 60,050, while Nifty50 was down over 200 points near 17,900 level.
Domestic stocks fell for fourth straight session on Friday. At Friday’s low of 60,146.16, the BSE 30-pack barometer was down 1,660 points in four sessions. BSE-listed stocks lost a total of Rs 4.40 lakh crore in market value today, taking four-day market capitalisation loss to Rs 11.76 lakh crore to Rs 276.14 lakh crore from Rs 287.90 lakh crore on December 19.
Nifty, which is among the world’s best performing index globally, is now reversing its outperformance vis-à-vis the other markets and breached the 18,000 mark today.
Pravesh Gour, Senior Technical Analyst, Swastika Investmart Ltd., said: “Nifty has slipped below its 50-DMA and psychological level of 18,000, which is not a good sign for the bulls. The 100-day moving average of 17,800 is now a key support level where we can expect a bounceback. However, the near term texture has become weak, where 18,200 is an immediate hurdle and 18,400 will be the next critical hurdle.”
Why is the Sensex, Nifty Falling Today?
Rise in China’s Covid Cases
Soaring cases of Covid in China and elsewhere, fears of emergence of new variants and choking of supply chains, are making markets further jittery. Prime Minister Narendra Modi on Thursday cautioned against complacency, called for strict vigil and directed that the ongoing surveillance measures, especially at international airports, be strengthened.
Fears related to Covid have also started troubling investors once again as the infection rages through China. Bloomberg had yesterday reported that China is likely seeing 1 million Covid cases and 5,000 deaths a day. There is an element of overreaction in the market to the Covid news, said Dr. V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services.
US Job Data
Data from US on consumer confidence, jobless claims, and Q3 GDP numbers surprised on the upside but it also means that it also increases the risks of more Fed rate hikes.
US Q3 GDP recorded a growth of 3.2 per cent, above the estimate of 2.9 per cent. Initial jobless claims rose slightly to 216,000, a beat of the 222,000 estimate.
Oil Prices Rise
Moya of OANDA said the oil market’s biggest wildcard is China and optimism is still strong that the reopening will continue and eventually lead to more demand for crude.
“OPEC+ should have an easy job over the next couple of months as they remain nimble and ready to adapt to whatever the trajectory appears to be for crude demand. WTI crude appears to have a floor at the $70 level and initial resistance at the $80 level, with major resistance at the $83.50 region,” he said in an overnight note.
On Friday, Brent crude rose 88 cents, or 1.1 per cent, to $81.86 a barrel, while US West Texas Intermediate crude was at $78.41 a barrel, up 92 cents, or 1.2 per cent higher.
Japan Inflation
Putting Asian markets under pressure was Japan’s core consumer inflation data which hit a fresh 40-year high of 3.7 per cent in November as companies continued to pass on rising costs to households. Japan’s Nikkei lost over 1 per cent and was set for its worst week since mid-June.
Technical Factors
Suggesting a rise in pessimism on Dalal Street, the headline equity index Nifty today formed a bearish engulfing pattern on the daily chart on Thursday. Nifty had strong support at 18,000 mark, which was breached today. Analysts say the index could gradually fall to 17,839 on the downside while 18244-18340 could be tough to cross in the near term.
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