Sensex falls over 250 points, Nifty below 24,250 as Mideast peace hopes fade. More pain ahead?

The Indian stock market continued to record sharp losses, with Sensex falling for the third straight session and Nifty bleeding for the sixth consecutive session amid fading hopes for a peace deal in the Middle East.

After opening, Sensex fell over 250 points to 77,470 while Nifty 50 lost around over 50 points to slip below 23,250 level. Broader markets traded mixed, with Nifty Smallcap 100 in the green and Nifty Midcap 100 in the red.

Infosys, Asian Paints, Bharti Airtel, IndiGo and HCL Tech shares dropped more than 1% each to lead losses on Sensex, while TCS, Tech Mahindra, Hindustan Unilever and Adani Ports shares fell nearly 1% each. Bucking the trend, Eternal and Sun Pharma shares gained around 1% each.


Among the sectors, Nifty IT and Nifty Realty dropped more than 1% each, while Nifty Pharma, Nifty Oil & Gas and Nifty Auto gained around half a percent each. The overall market breadth however turned slightly positive, with NSE seeing 1,428 advances against 1,347 declines, while 120 stocks remained unchanged.

What lies ahead for Dalal Street?

Two developments during the last several hours are likely to impact the market today, according to VK Vijayakumar, Chief Investment Strategist at Geojit Investments. One, Brent crude has again spiked above $91 on escalation of tensions between Iran and the US. Two, the US 10-year bond yield has increased to 4.73% and this is negative for FII inflows which had turned positive in July and August so far.

“The tailwind for the market is the resilient Indian economy and clear indications of a turnaround in earnings growth. This tailwind will encourage DIIs, flush with funds, to buy any significant dip in the market,” Vijayakumar pointed out.

The analyst believes that retail investors can use the dips in the market to slowly accumulate high quality stocks for the long-term. Heightened uncertainty will keep the market volatile, he noted.

Technical view on Nifty

Bargain hunting stepped in again on Monday to arrest dips and trigger an upswing, but upsides remained capped, said Anand James, Chief Market Strategist at Geojit Investments. He noted that with Nifty having declined persistently through this month so far, a mean reversion swing higher appears likely.

“However, near term upside attempts will struggle to clear 24,540-24,666, while the potential for a leap to 24,850-25,100…appears to be low at the moment. Alternatively, inability to limit dips to 24,170, could expose 23,575,” the analyst said, explaining the technical charts.

(With inputs from agencies)
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