Once again bears have taken over the Street and headline indices at the time of writing this copy plunged by over 1 percent on both the indices to 14064 on the Nifty, while Sensex gave up over 620 points to trade at 47752. The weakness is primarily led by fall in the RIL, metal and pharma pack. This is even as globally there have been mixed cues as the US Fed is expected to stand pat in its monetary policy decision today. Also, the US administration said that it will soon dole out the much awaited US stimulus bill even without the support of the opposition, if the need be.
Now what's dragging the market, here are listed some of the probable reasons:
1. FII selling:
For long, FII buying into Indian equities was amongst the main trigger pushing indices to record high and now as analyst forecast consolidation and range bound movement after Sensex has hit 50,000 levels, there is seen selling by this investor category on expected lines.
"We had two consecutive days of FII selling in the market. It appears that the market is a bit apprehensive of some Budget tax proposals which may not be market-friendly. We don't know. So it makes sense to wait for the Budget and then take a call on investment strategy. L&T's results, particularly the order book, bodes well not only for the company but also for the economy," said VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services. Also, there is seen selling by domestic institutional investors.
2. Q3 earnings have come in weaker:
For India Inc. it is earnings season that is going on and some of the companies have reported weaker set of numbers. Also, for the banking sector NPAs have been a cause of worry for investors which have come low, despite the apex court's stay on categorization of loan accounts as NPA.
3. Auto pack is cautious:
As the centre has announced that from April 1 next year, there shall be scrappage of old vehicles owned by central government, there has been weakness in the Nifty Auto index to the extent of over 1 percent.
4. Heavyweights and Financials weigh:
RIL after its Q3 results continues to show weakness and has tumbled over 10% in 3-sessions. Also, HUL and HDFC twins continue to weigh with cuts of up to 3 percent.
5. Anxiety ahead of the Union Budget 2021:
There is nervousness on some of the budget proposals and investors are cautious and moving low ahead of it. The Budget 2021 to propel growth will very likely be a deficit budget and will be including several reforms. And now as the Budget is further expected to be a one of its kind a century it shall be a historic and its likely impact on the Budget is to be seen.
6. Weak global markets:
Japan's Nikkei rose 0.2 per cent and the South Korea and Taiwan also managed to gain 0.5 per cent. Meanwhile, European markets were also weak in trade with losses up to 0.7 percent on the FTSE index. This is as there is nervousness around the US stimulus and US Fed's monetary policy decision due later today.