Sensex and Nifty 50 Drop Nearly 1%: Analyzing Today’s Market Decline

• Indian stock market benchmarks, the Sensex and the Nifty 50, extended their losing streak into the fourth consecutive session, closing with significant losses of about a percent each on Wednesday, May 29.
• The market is grappling with weak global cues, election-related jitters, and concerns over geopolitical tensions.
• “The nervousness in the market continues with uncertainty regarding the election results,” said Dr. V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services.

Indian stock market benchmarks, Sensex and Nifty 50, face significant losses amid weak global cues and election-related jitters.

Why Did the Indian Stock Market Fall Today?

Experts observe that the market is witnessing profit booking at higher levels as it lacks fresh triggers and is uncertain about the election result on June 4.

Election-Related Heebie-Jeebies

Despite prevailing expectations that the BJP-led NDA will retain power after the election, market participants are keen to see whether the coalition will be able to secure as many seats as expected to continue its promised policy reforms confidently.

“The nervousness in the market continues with uncertainty regarding the election results,” said Dr. V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services.

Weak Global Cues

Weak global cues further weighed on domestic market sentiment as expectations of rate cuts have been weakening. US government bond yields reached a four-week high, putting pressure on stocks.

“Weak global cues prompted investors to take profits ahead of the US core PCE data, a key gauge of inflation anticipated to rise. The continued soaring of global inflation, like the latest trend in Japan and Australia, is diminishing investor expectations of a US Fed rate cut in the near term,” said Vinod Nair, Head of Research, Geojit Financial Services.

Crude Oil Prices Rise

Crude oil prices rose over a percent today amid growing geopolitical tensions after Israel’s attack on Rafah. Moreover, there are expectations that OPEC+ will maintain curbs on crude supply at its June 2 meeting.

Benchmark Brent Crude traded near the $85 per barrel mark.

Selloff in Banking Stocks

Poor performance of banking heavyweight stocks, including ICICI Bank, HDFC Bank, Axis Bank, and SBI, dragged the benchmarks. Banking stocks carry significant weight in the Sensex and the Nifty 50, so weakness in them drags the key indices down.

Technical Factors

Hrishikesh Yedve, AVP of Technical and Derivatives Research at Asit C. Mehta Investment Intermediates, pointed out that the Nifty 50 confirmed a dark cloud cover candlestick pattern and witnessed profit booking.

“On the downside, the 21-DEMA is near 22,567 and the 34-DEMA is near 22,480. Thus, 22,567 and 22,480 will serve as support points for the index, while 22,800 and 23,110 will act as a major hurdle in the short term,” said Yedve.

Conclusion

In summary, the Indian stock market’s decline can be attributed to a combination of election-related uncertainties, weak global cues, rising crude oil prices, selloff in banking stocks, and technical factors. Investors are advised to remain cautious and consult certified experts before making any investment decisions.