Why is the market falling today? Indian equity benchmarks fell sharply in morning trade on Friday after registering a rebound in the previous session. Reflecting rising tension on Dalal Street, the BSE Sensex fell nearly 1,100 points. fear gauge index India The VIX rose up to 13 percent ahead of the presentation of the results of the Union Budget and the US Fed meeting next week.
Dalal Street investors lost Rs 8.1 lakh crore as the total market capitalization of BSE-listed stocks declined to Rs 268,344 lakh crore. Domestic indices slipped today as banks, financial and energy stocks shrugged off worries of a US recession.
Bank stocks were worst hit smelly The bank tumbled more than 1,300 points, or 3.3 percent. PSU bank stocks, which had been performing better in the past few months, were the worst hit.
Here are the major factors dragging down Indians Share Market Down-
banking stocks plunged
India’s largest lender SBI declined over 5 per cent in PSU bank shares. Other top losers included Bank of Baroda, PNB and ICICI Bank.
FII selling
Foreign institutional investors or FIIs have been selling this month, taking the total outflow in equities to Rs 16,766 crore in January, NSDL data showed. Last Wednesday alone, FII selling stood at Rs 2,394 crore. Analysts say FIIs are redistributing money from India to relatively cheaper markets like China.
Market nervous before budget
Market participants are expecting the government to continue with its infrastructure spending and announce measures to attract more funds from the private sector.
If the expectations of the market are not met, then a decline can be seen in the market. The FY24 fiscal deficit numbers will also be keenly watched. Foreign brokerage Morgan Stanley expects fiscal deficit to be 5.9 per cent of GDP in FY2024, compared to 6.4 per cent in FY23.
“There is a need to consolidate the fiscal deficit. The starting point of 6.4 per cent is already so high that markets won’t like it if there is any further decline,” Upasana Chachra, chief India economist at Morgan Stanley, has said.
UN cuts India’s 2023 growth forecast
The United Nations has cut its GDP growth forecast for India to 5.8 per cent for the calendar year 2023, citing the impact of tight monetary policy and weak global demand.
“Growth in India is expected to remain strong at 5.8 per cent, although slightly lower than the projected 6.4 per cent in 2022, as higher interest rates and a global slowdown weigh on investment and exports,” the UN report said. ” World said the Economic Situation and Prospects 2023 report published on January 25.
Fed result fear
The US economy expanded at an annual pace of 2.9 percent from October to December, which was better than expected. Economists had estimated a growth of 2.3 per cent. This indicates that the US Federal Reserve may remain dovish for a longer period.
Rubella Farooqi, chief US economist at High-Frequency Economics, wrote in a research report, “Recent data suggest that the pace of expansion may slow sharply (in the current quarter), as the effects of restrictive monetary policy take hold.” Have been.” The Fed’s outlook, the desired slowdown in the economy would be welcome news.
The next Fed decision is scheduled for February 1, 2023, coinciding with India’s budget.
nifty technical
Santosh Meena, Head of Research, Swastika Investmart Ltd, said: “BankNifty surrendered its 100-DMA of 41,500, triggering multiple stop losses, which is adding to further selling pressure. The market is following last year’s pattern. As in 2022, Nifty saw Doji candles (indicating a range bound move) in the second and third week of January, followed by a sharp decline in the last week of January. There was an opportunity because then we saw a sharp rally after the budget.So, as per the template, we can expect a rally in the market after the budget.
Technically, 40,000 is a psychological support level for BankNifty, while 39,500 is an important support level. If BankNifty manages to bounce back from 40,000-39,500 area, we can expect a bounceback. However, BankNifty needs to be back above 42000 for any meaningful recovery.”
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