The Dalal Street experienced a significant setback on Wednesday as benchmark stock market indices faced a substantial decline, creating unease among investors. The S&P BSE Sensex tumbled over 700 points, reaching 72,308 around 1:10 pm, with the Nifty50 witnessing a similar downturn. The mood on Dalal Street was dampened by high volatility, particularly affecting shares of energy companies and public sector banks.
Key Factors Contributing to Market Nervousness:
- Volatility and Cautious Investors: High volatility in the market stems from the cautiousness among investors, particularly in anticipation of key domestic and US economic data scheduled for release on Thursday.
- India’s Q3 GDP Data: The upcoming release of India’s Q3 GDP data has fueled apprehension, with polls indicating a moderated growth of 6.6 per cent in the third quarter of FY24.
- US Core PCE Price Index: The release of the US core personal consumption expenditures price index has added to nervousness as investors seek insights into the future interest rate stance of the US Federal Reserve.
- Profit Booking and Foreign Institutional Investors (FIIs): Analysts suggest that profit booking and large-scale selling of Indian stocks by foreign institutional investors (FIIs) might have contributed to the decline.
- Economic Indicators and US Government Shutdown Concerns: Investors are cautious ahead of various economic indicators such as GDP data, PCE price index data, and manufacturing PMI numbers in the US. Additionally, concerns about a potential partial shutdown of the US government on March 1st without a spending bill are contributing to market nervousness.
Despite the downturn, Pravesh Gour, Senior Technical Analyst at Swastika Investmart Ltd, sees this as a potential buying opportunity for long-term investors. Gour emphasizes that market corrections are common, and some factors contributing to the decline may be short-term in nature.
Major sectoral indices, including Nifty Bank, Nifty Financial Services, and Nifty IT, were trading in negative territory. Media, auto, realty, oil & gas, and PSU stocks also witnessed significant declines.
While consolidation is predicted in the upcoming trading sessions, analysts like Samrat Dasgupta, CEO of Esquire Capital Investment Advisors, view any decline as an opportunity to invest in the pre-election rally.
