The Indian stock market started out strong today, but profit-taking at higher levels caused Dalal Street to turn negative by lunchtime. In reality, Wednesday’s trading saw a strong sell-off in the broad market and all three major benchmark indices.
Today, the BSE Sensex opened higher at 64,619 and increased to an intraday high of 64,787. The 30-stock index, however, experienced heavy selling at higher levels and dropped to an intraday low of 63,912 levels, losing close to 1,500 points during the previous two sessions.
Similarly, today’s Nifty 50 opened higher but quickly experienced a sell-off. Today, the Nifty shattered the important 19,200 support level and fell as low as 19,074; nearly 450 points had been lost in the previous two sessions. In this short week, Bank Nifty too dropped below 43,000 levels and lost close to 900 points.
The small-cap index dropped close to 1.45% during Wednesday’s dealings, while the broad market experienced a significant sell-off as well. This week, small-cap stocks have dropped over 2,330 points, while the mid-cap index has corrected by about 1,240 points.
Experts in the stock market claim that there was some buying interest in the Indian stock market today as a result of the 10-year US treasury yield retracing from 16-year higher levels and falling below 5% levels. However, the US bond market is once more showing signs of purchasing interest as the 10-year US Treasury yield has risen and is once more getting near to 5% levels. They claimed that additional factors that contributed to the Indian stock market’s current downturn were the Israel-Hamas conflict, a strong US currency, selling by FIIs, Q2 earnings in 2023 that came in below expectations, and growing inflationary worries.
Focus on US Treasury yields
Avinash Gorakshkar, Head of Research at Profitmart Securities, commented on the factors dragging down the Indian stock market over the past five sessions, stating that “rising US Treasury yields are putting pressure on the global equity market, and India’s Dalal Street is not an exception to it.”
Avinash Gorakshkar continued by saying that the 10-year US Treasury yield had fallen below 5% levels after retracing from 16-year high levels. However, investors are once more showing a buying interest in US bonds, which led to profit-taking in the Indian stock market. This is the cause of the Indian stock market’s decline following a gap-up opening.
Israel-Hamas conflict
Arun Kejriwal, the founder of Kejriwal Research and Investment Services, pointed to the Middle East tension and said, “The Middle East tension has created an environment of uncertainty and this has generated perplexity among international stock market investors, including Dalal Street.
Greater US dollar
The US dollar has once again regained its momentum, according to Avinash Gorakshkar of Profitmart Securities, as the US dollar index has returned the psychological 106 levels after dipping below 106 levels during morning transactions on Wednesday. Additionally, this has caused the Indian stock market to begin taking profits at greater levels.
