Nifty on Wednesday gave up its hold over the 22,000 level while Sensex fell around 800 points or 1 per cent to the day’s low at 72,300 on Wednesday. In the process, Dalal Street investors were left poorer by about Rs 6 lakh crore as the market capitalisation of all BSE-listed stocks fell to Rs 386 lakh crore.
Pravesh Gour, Senior Technical Analyst at Swastika Investmart Ltd., “The movement of the stock market is complex and vulnerable to several influences. Corrections in the market are common. Investors with long-term horizons may see this as a buying opportunity. Ninety stocks are trading down as the Nifty Midcap index drops more than 1,000 points. There can be brief selling pressure as a result of investors taking profits following large gains. The market may have declined as a result of foreign institutional investors (FIIs) selling off large quantities of Indian stocks. The market also became nervous before so many economic indicators such as GDP data, PCE price index data, and manufacturing PMI numbers in the US. Another reason may be that the US government will partially shut down on March 1st without a spending bill.”
Among the frontline shares, Power Grid, Maruti and Asian Paints were the major losers, down over 2 per cent each. Indusind Bank, Mahindra & Mahindra, Tata Steel and Reliance were the other prominent losers.
In the broader market, the BSE MidCap and SmallCap indices plunged over 1 per cent each.
India VIX, fear index, jumped 4.02 per cent to 16.36-level.
“Market is likely to be in a range-bound zone in the near term. FIIs have sharply reduced their selling this month and have turned buyers to the tune of Rs 872 crore in the cash market, so far in February, despite the high US bond yields. This indicates that FIIs are unlikely to press big selling pulling the market sharply down,” said Dr. V K Vijayakumar of Geojit Financial Services.
Here are the key reasons behind the stock market fall:
Sebi Action On Mutual Funds
The gravity-defying rally in smallcaps and midcaps has caught the attention of markets regulator Sebi which has asked mutual funds to disclose more about risks in the space where liquidity could be a challenge.
Mutual funds are being asked to disclose how long it might take to accommodate large redemptions, what impact large outflows could have on the value of the portfolio and how much cash and liquid assets the fund holds to meet outflows, Reuters reported.
Bank, Energy, Media, Realty & Auto Stocks Tank
All the 15 sector gauges — compiled by the NSE — closed in the red. Sub-indexes Nifty PSU Bank, Nifty Oil & Gas, Nifty Media, Nifty Realty and Nifty Auto were underperforming the NSE platform by falling as much as 2.39 per cent, 1.84 per cent, 3.44 per cent, 2.67 per cent and 1.66 per cent, respectively.
Global Cues
Asian shares were mostly trading lower ahead of key US economic data. Investors are awaiting the US Federal Reserve’s preferred measure of inflation, the core personal consumption expenditures (PCE) price index, due on Thursday, as they seek clues on the timing of the first rate cut.
Expiry Pressure
A part of the volatility in the market today is also attributed to the monthly F&O expiry tomorrow.
“For February monthly series, 22,200 call has significant open interest, followed by 22,300 strikes. On the put side, 22,200 has significant open interest, followed by 22,100 strike implying the zone of 22,140-22,120 will act as immediate support for the index. While, on the upside the level of 22,270 will act as immediate resistance for the index,” SBI Securities said.
Profit booking
The two contrasting themes of buy the dip and sell the rise has been dominating the market mood in recent weeks. While valuations are supporting the case for booking profits, retail-led flush of money is protecting the downside.
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