Sensex, Nifty Crash: The Indian stock market gave up early gains due to frenzy bearish trend that pushed Sensex to erase its 79,000 mark and Nifty giving up 24,000 mark on Thursday, November 28, 2024. Investors are expected to be cautious on Friday, November 29, as US market will open after a 1-day holiday due to Thanksgiving. Investors are likely to be on wait-on-watch mode as a slew of macro data including India's GDP data scheduled to be released.
Sensex, Nifty Crash:
During trading hours of November 28, Sensex nosedived by 1,315.16 points or 1.64% to hit an intraday low of 78,918.92. Further, Nifty 50 underperformed Sensex gradually, by free-falling up to 1.65% or 401.55 points to an intraday low of 23,873.35.
The majority of indices were in deep red with the exceptions of Adani and PSU bank stocks. The worst to take a hit were IT stocks, followed by financial, private banks, and auto stocks. India's volatility index (VIX) skyrocketed by nearly 4%.
As per, Vinod Nair, Head of Research, Geojit Financial Services, domestic markets took a breather after a strong start to the week. The overnight sell-off in the US market, driven by renewed uncertainty about the rate cut trajectory and rising geopolitical tension, led to a correction in heavyweight IT and consumer discretionary stocks. Conversely, the broader market outperformed the frontline index due to a shift in the stance of FIIs and investors seeking opportunities in undervalued stocks.
Explaining further, Vishnu Kant Upadhyay, AVP - Research & Advisory at Master Capital said the downturn was triggered by reports of Russia launching cruise missile attacks on Ukrainian cities, including Odesa, Kropyvnytskyi, and Kharkiv, as reported by Ukrainian news outlets Zerkalo Tyzhnya and Suspilne. Adding to the negative sentiment, a sell-off in IT stocks followed weaker-than-expected U.S. PCE inflation data, which dampened hopes of an interest rate cut in the December FOMC meeting. These factors collectively weighed heavily on investor confidence, driving markets lower.
What to expect on Friday, November 29?
Siddhartha Khemka, Head - Research, Wealth Management, Motilal Oswal Financial Services said, US PCE data released yesterday came in below expectations, while GDP growth of 2.8% met forecasts, adding to concerns of a slower pace of Federal Reserve rate cuts. Investors remain cautious ahead of key data releases tomorrow, including India's Q2 GDP numbers, China's manufacturing PMI, and Eurozone CPI. Optimism could return if geopolitical concerns ease, though consolidation within a broader range is likely to continue.
On the technical front, Shrikant Chouhan, Head of Equity Research, at Kotak Securities explained that on daily charts, it has formed a long bearish candle which indicates further weakness from the current levels.
Chouhan added, "We are of the view that the current market texture is weak and technical bounce back possible only after dismissal of 24000/79200 or 20-day SMA (Simple Moving Average). Below 20-day SMA or 24000/79200 market is likely to retest the levels of 23850-23750/78500-78200. On the flip side, Above 24000/79200 it could bounce back till 24150-24175/79500-79800."
In Upadhyay's view, It cannot be overlooked that heavy call writing around the 24300-24400 zone reflects significant bearish efforts to defend this price level from bullish advances. Today's session witnessed fresh open interest (OI) build-up at these strikes, clearly indicating that bears continue to dominate the market sentiment. On the technical front, the 24350 level serves as a critical horizontal resistance, with the market repeatedly failing to breach this zone in recent trading sessions. As long as prices remain below the 24500 mark, any upward movement is likely to be viewed as an opportunity for traders to exit their long positions.
To investors, Ajit Mishra - SVP, Research, Religare Broking said, Nifty struggled to breach the key resistance at 24,350 and slipped below its 20 DEMA, filling the gap on the daily chart. This suggests a likely consolidation phase ahead. Decline in key sectors like IT and banking adds to the negative sentiment. Traders are advised to remain cautious and focus on stock-specific opportunities until a clearer trend emerges.
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