There has been a significant decline in the Indian stock market in the last three trading sessions, indicating a rise of bearish sentiment in the market. The Nifty 50 has been on a downward trend for the sixth consecutive session, breaking the crucial 19,000 mark during trading on Thursday, which is the first time it has occurred since June 28, 2023. In October, the index has already experienced a decline of 3.70%, which is the largest monthly fall since September 2022, when the Nifty 50 fell by 3.74%. The Nifty 50 started its downward trend on October 17 at approximately 19,811 levels and has since fallen sharply to the current level of 18,908 (as of Thursday – 10:00 AM), resulting in a loss of 1314 points or 4.22%. Furthermore, compared to its all-time high of 20,222, the index has declined by 6.4%.
The Nifty 50 started the day with a significant gap down at 19,027 levels, as compared to the previous day’s closing level of 19,122. The bearish trend continued in the early trading hours as the index reached a four-month low of 18,884, dropping 1.12%. This decline followed a similar trend in Asian markets after US tech stocks plummeted overnight due to disappointing earnings reports and rising Treasury yields. According to Trading Economics data, the 10-year US Treasury note saw a second consecutive trade above 4.9% on Thursday. Of the Nifty 50 components, Adani Enterprises (down 3.2%), Tech Mahindra (down 2.8%), Mahindra & Mahindra (down 2.6%), Bajaj Finserv (down 2.5%), Hindalco Industries (down 2.1%), Bajaj Finance (down 1.9%), LTIMindtree (down 1.7%), and Eicher Motors (down 1.7%) had the most significant losses. Axis Bank and HCL Technologies were the only scrips trading in the green today, with a marginal gain of 0.8% and 0.1%, respectively. Nifty Realty suffered the most extensive decline among sectoral indices, dropping as much as 3.17% during the day’s trading. This was followed by Nifty Media (down 2.6%) and Nifty PSU Bank (down 2.31%).
Despite China’s recent announcement of a one trillion-yuan stimulus, a significant drop in crude oil prices, and a positive performance by Indian private sector banks in Q2 FY24, global investors still remain hesitant. Instead, their attention has been fixated on geopolitical tensions and rising bond yields in the US. Dr. V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services, believes that the combination of economic and geopolitical factors has created a risk-off sentiment in global equity markets. The conflict between Israel and Hamas remains a major concern for investors, as it has the potential to impact global growth. With the global economy already in the midst of a slowdown, Dr. Vijayakumar cautions that a prolonged conflict could exacerbate this trend.