Sensex tanks 1,350 points, Nifty falls 421 point in last two trading sessions

“Investor sentiment is on edge as tensions in West Asia continue to drag the market. Despite a drop in oil prices and an optimistic view of the progressing Q2 results season, investors took a cautious approach due to the expectation that a higher interest rate scenario would continue slowing future growth,” said Vinod Nair, Head of Research at Geojit Financial Services.

On Monday, the yield on the 10-year US bonds surged to 5.02 per cent, its highest level since July 2007. It, however, eased to 4.859 per cent on Wednesday.

Bank of Baroda’s Chief Economist Madan Sabnavis in a note said that presently there are concerns on the war in Israel, oil prices going higher, stock markets being volatile across the world, dollar getting stronger and Fed signalling that it is still not done with rate hikes.

“Concerns around global economic slowdown specially in Europe resurfaced after Eurozone Composite PMI (flash) worsened to 46.5 in October 2023 (lowest since-November 2020) from 47.2 in September 2023. This comes ahead of the ECB policy meet, scheduled later this week wherein it is expected the members might not continue with higher interest rates for a longer period of time,” BoB’s note said.

The domestic market saw some profit booking during the day, including in mid-cap and small-cap stocks.

“Higher valuations of Indian stocks have been a concern and the current global turmoil is allowing investors to reduce their equity exposure,” said Shrikant Chouhan, Head of Equity Research (Retail), Kotak Securities Ltd.

Technically, due to weak sentiments, the Nifty has breached the important support level of 19200 and has also formed a bearish candle on daily charts, which is largely negative. For day traders, 19050 would act as a trend decider level, above which we could see a one quick pullback rally till 19200-19250, he said.

On the flip side, fresh selloff is possible only after the dismissal of 19050 and below the same, the market could slip till 19000-18930, Chouhan said.

Except metals and PSU Bank, all sectors ended in red. Metal stocks were in momentum after China unveiled plans for $137 billion extra debt to boost infrastructure spending, said Siddhartha Khemka, Head – Retail Research, Motilal Oswal Financial Services Ltd.

Top gainers on the NSE included Tata Steel, Coal India, Hindalco Industries, Tata Consumer Products and SBI. The companies that lost the most on the NSE were Apollo Hospital, Adani Enterprises, SBI Life, Cipla and Eicher Motors.

On Wednesday, foreign portfolio investors (FPI) offloaded Rs 4,236.6 crore of domestic shares on a net basis.

According to Motilal Oswal’s Khemka, Indian markets are expected to remain volatile on the back of concerns over higher interest rates, ongoing Israel-Hamas war and mixed Q2 results. On the global front, investors will take cues from the ECB interest rate decision on Thursday, he said.