The whole market value of all BSE-listed businesses plummeted to Rs 371.69 lakh crore, down from Rs 385.64 lakh crore in the previous trading session, costing investors a total of Rs 13.57 lakh crore.
Due to both domestic and international factors, the equities markets suffered a sharp sell-off during the trading session on Wednesday. As the session went on, the flagship indices gave up their early gains and selling pressure increased. During the session, all of the industries and sectors were damaged.
The BSE Sensex, which is a 30-share pack, fluctuated between 1,500 points. But at 72,761.89, the BSE’s barometer ultimately finished at 906.07 points, or 1.23% lower. The Nifty50 index of the NSE fell more than 540 points from its peak and finished the day at 21,981.75, down 353.95 points, or 1.58%, on the day. India’s VIX fear index increased by almost 6% to 14.43.
Both the BSE midcap and smallcap indexes saw declines of up to 5%. The whole market value of all BSE-listed businesses plummeted to Rs 371.69 lakh crore, down from Rs 385.64 lakh crore in the previous trading session, costing investors a total of Rs 13.57 lakh crore.
With frantic selling towards the finish pushing the benchmark Nifty below 22,000, the markets reversed early gains and into negative territory, according to Prashanth Tapse, Senior VP (Research), Mehta Equities, who advised investors to hold off on placing any significant long-term wagers.
“There have been concerns over the rising valuations of mid & small-rung stocks for a while, and with the regulator too highlighting these concerns, traders preferred to trim their exposure which resulted in a massive correction across the board,” according to him. The following are the main elements that damaged the market mood on Wednesday:
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US Inflation Statistics
Bond rates rose as a result of the US consumer price index (CPI) rising strongly in February, exceeding estimates and pointing to some stickiness in inflation. Still, a few analysts believe that the Federal Reserve will lower interest rates in June. Still, core numbers exceeded projections as well.
According to Vinod Nair, Head of Research at Geojit Financial Services, the Fed’s capacity to carry out impending rate reduction has been called into question by the ongoing rate of inflation in the US. “However, the easing trend in global commodity prices may prompt central banks to consider rate cuts in the latter half of 2024, which could be positive for equity,” he stated.
Selling heavyweight index stocks
The market mood was damaged by sell-offs in heavyweights on the index, such as Reliance Industries, Larsen & Toubro, and a few Tata Group stocks. Of the 906 points that were slashed from the BSE Sensex, only Reliance Industries contributed around 260 points. For the day, NTPC contributed about 100 points.
Vulnerability in the wider markets
Second-rung counters kept bleeding as wider markets maintained their downturn for an additional trading day. On Wednesday, the BSE smallcap index fell 5.11 percent for the day, while the BSE midcap index fell 4.2%. 1,086 equities in all closed their corresponding lower circuits during the day.
According to Pravesh Gour, Senior Technical Analyst at Swastika Investment, there has been worry over the inflated values in the small- and mid-cap spaces, which are being generated by the excessive optimism of individual investors. But it needed a strong warning from regulator Sebi to effect a correction. Mutual fund activity and ongoing sales indicate more hardship to come.”
Prices for crude oil increase.
Wednesday saw a rise in crude oil prices due to indications of robust global demand, particularly from the US, which is the world’s largest consumer. Despite relatively sticky US inflation, optimism that the Federal Reserve would soon begin lowering rates also helped to boost confidence. The United States’ crude oil and gasoline stockpiles decreased last week, suggesting a robust demand.
Technical Elements
Largecaps appear to have joined the small- and mid-cap stocks that have been heavily pressured to sell in recent days, according to Rahul Sharma, Head of Technical and Derivatives Research at JM Financial Services.
“Any maintenance below the Nifty’s derivatives support level of 22,000 should be interpreted as a signal for longs to proceed with caution,” The only bright spot on the day was the performance of a few private banks and FMCG firms, which managed to hold steady during the market’s selloff, the speaker stated.
The inflation rate in India
India’s headline inflation rate decreased from 5.10 percent in January 2024 to 5.09 percent in February 2024, although it stayed close to the MPC’s tolerance level upper range. Fuel and Core-CPI moderated, but the food price index remained high.
In addition to the usual monsoon rainfall, food prices may moderate in the upcoming months due to an increase in rabi planting. In addition to local price reductions for LPG and CNG, fuel costs may continue to be benign due to a slowdown in global demand, according to Shraddha Umarji, Prabhudas Lilladher’s institutional research economist.
“Lower global commodity prices and higher borrowing costs that are short-term depressing demand will help with core inflation.” The MPC decision at the upcoming meeting would be influenced by Indian Inc.’s steady growth forecasts and waning inflationary worries, she continued.
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