Market Sell-Off Continues For The 7th Straight Day; Sensex & Nifty Fall 10% From Record Highs; Triggers?

Indian equity markets extended their bearish trajectory on November 18, with the NSE Nifty 50 plummeting below the critical 23,400 mark amid persistent selling pressure. The index lost over 130 points during the day, while the BSE Sensex shed approximately 350 points, marking a cumulative decline of over 10% from its record high of 85,978.25 achieved in late September. This slide also signifies Nifty's seventh consecutive losing session.

The downturn was exacerbated by a sharp selloff in IT stocks, compounded by fears of a slower-than-expected pace of interest rate cuts in the United States. Fresh data revealing stronger-than-anticipated retail sales and rising import prices added to concerns, further denting market sentiment.

Dr VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services, explained the market's current predicament, stating, "Even though Nifty has corrected 10.4% from its peak, there are no signs of a sustained recovery. Relentless FII selling, earnings downgrades for FY25, and the implications of the Trump trade are weighing heavily. Sentiments have turned negative, and investors should exercise caution, waiting for clearer market direction." He advised focusing on resilient sectors like digital companies and high-quality banking stocks, highlighting large-cap players such as Reliance Industries (RIL) and Eicher Motors for their resilience.

Technical indicators also point to key support levels for the Nifty. Akshay Chinchalkar, Head of Research at Axis Securities, observed that the index is nearing its 200-day moving average (DMA) and the lower band of a descending parallel channel, suggesting support around 23,500. He noted, "Thursday's session traced a doji-like candle, indicating reduced selling pressure. However, a sustained rally above 23,676 is essential for a rebound; otherwise, the market may test support in the 23,200-23,300 range."

Adding to the global concerns, US equity markets closed lower on Thursday, with uncertainty surrounding Donald Trump's second presidential term fueling investor anxiety. The market is grappling with potential policy shifts in 2025 as key cabinet picks surface, creating further speculation. Meanwhile, gold prices recorded a fifth consecutive daily decline, the longest streak since February, as per Dow Jones Market Data.

Deepak Jasani, Head of Retail Research at HDFC Securities, highlighted broader economic risks, quoting India's central bank chief: "Central banks have managed a soft landing through continual and unprecedented shocks, but risks of global inflation resurgence and slowing economic growth persist. Headwinds from geopolitical conflicts, geoeconomic fragmentation, commodity price volatility, and climate change continue to grow."

The macroeconomic backdrop remains challenging, with the dollar index holding firm at 106.6 and the US 10-year bond yield at 4.44%. These factors leave little room for a swift reversal of foreign institutional investor (FII) outflows, further pressuring Indian equities.

As the Nifty inches closer to oversold territory, cautious optimism is emerging for potential rebounds. However, the broader sentiment remains fragile, with global uncertainties and domestic earnings downgrades continuing to weigh heavily. Investors are advised to navigate this volatile phase with prudence, focusing on fundamentally strong sectors and stocks with robust growth prospects.