The Indian stock market began the week on a weak note, with Sensex and Nifty slipping into the red on Monday as fresh escalation in the US-Iran conflict pushed oil prices higher. The decline extends a four-week losing streak, even as economic and corporate earnings trends remain supportive.
Sensex dropped over 250 points to 76,251, while Nifty 50 lost over 79 points to 23,818 on Monday at 9.22 AM. Broader markets remained mixed, with Nifty Midcap 100 index recording marginal gains while Nifty Smallcap 100 index remained in the red.
Infosys, HCLTech, Tech Mahindra and TCS shares were the top losers on Sensex, falling 1-2%. Hindustan Unilever, Axis Bank and Maruti Suzuki shares followed, dropping 0.5% each. Bucking the trend, BEL, Eternal, Bajaj Finance, Bharti Airtel and few other stocks were trading in the green with marginal gains.
Among the sectors, Nifty IT dropped more than 1% while Nifty Metal declined around 0.6%. The overall market breadth turned negative, with NSE seeing 1,612 declines against 1,206 advances, while 133 stocks remained unchanged.
What lies ahead for Dalal Street?
The market has been drifting down for four weeks now, VK Vijayakumar, Chief Investment Strategist at Geojit Investments noted. A relevant question is why this downtrend is continuing despite positive fundamental news regarding the economy and corporate earnings. The analyst said that one explanation can be that worsening tensions in the Middle East and the consequent elevated crude prices are weighing on the market.
While this is relevant, there is another domestic factor which is impacting the market, he said. “This is the ongoing IPO boom and the spate of big IPOs expected to hit the market this month. There are eleven mainboard IPOs hitting the market this week. The mega IPOs from NSE and Jio also are expected this month. These mega IPOs are expected to absorb humongous liquidity from the market. Investors are looking for listing gains from these IPOs. In brief, the present focus is on the IPO market rather than the secondary market. This is likely to continue throughout September,” according to the analyst.
The better-than-expected jobs data in the U.S. has raised the prospects of a rate hike by the Fed in September, and this also will weigh on equity and bond markets globally, Vijayakumar concluded.
Nifty’s downside marker placed at 23,860 remained intact, while also resisting upsides to 23,960 on anticipated lines, said Anand James, Chief Market Strategist at Geojit Investments.
He advised investors to expect renewed upswing attempts above 23,800, but the 24,150-24,215 region will continue to be the hurdle to cross before strength is confirmed. “Nifty’s inability to float above 23,800 could raise fears of a drop to the low 23,000s, with an initial objective of 23,570,” the analyst further said.
Disclosure: This article has been written by Debaroti Adhikary, who is not a Sebi-registered Research Analyst or an investment advisor. Debaroti Adhikary does not hold any financial interest in the company named in the article as of the date of publication. The views/recommendations mentioned in this article, wherever applicable, are those of the respective Sebi-registered Research Analyst/brokerage and have been reproduced/reported with due attribution. They should not be construed as the views or recommendations of the EconomicTimes Digital or the journalist. Readers are advised to consider the original research report and make their investment decisions based on their own assessment.
