GIFT Nifty suggests follow-up selling on Friday after markets post biggest single-day decline since June 2024

GIFT Nifty suggests follow-up selling on Friday after markets post biggest single-day decline since June 2024

• Indian markets fell over 3%, worst session since June 2024
• HDFC Bank exit and crude price surge triggered heavy selling
• Foreign investors sold Rs 52,704 crore, mainly financial stocks

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Indian equity benchmarks slumped more than 3% on March 19 in their worst session since June 2024, dragged down by heavyweight HDFC Bank after the abrupt exit of its chairman and by a surge in crude prices following attacks on Middle East energy facilities.

The Nifty 50 fell 3.26% to 23,002.15 points, while the BSE Sensex also lost as much to settle at 74,207.24.

Meanwhile, GIFT Nifty is suggesting a follow-up selling on March 20.

At 5:35 pm on March 19, GIFT Nifty was trading 0.35% lower at 23,035. Wall Street futures were trading up to 0.44% lower.

"Even if the conflict gets resolved, energy prices may not come back to pre-war levels immediately, given the damage to energy infrastructure in the region," said Dhiraj Relli, managing director and chief executive officer of HDFC Securities.

"We are likely to see downward revisions in earnings forecasts for Indian companies, driven both by the direct impact of higher crude prices and their cascading effect across input costs and consumption," analysts said.

Today's market activity marks the heaviest fortnightly selling in 17 months and dragging the Nifty 50 to its worst fortnight since the COVID-19-led rout in March 2020.

Foreign portfolio investors offloaded stocks worth Rs 52,704 crore, data from the National Securities Depository showed on Thursday, with financials - the most foreign-owned major Indian sector - accounting for 60% of the total outflows.

Sustained selling dragged the Nifty 50 down 8.1% for the first half of this month, with financials and banks plunging 9.8% and 11.2%, respectively.

The Nifty 50 and Sensex have dropped about 10% each so far this year, and confirmed a technical correction last week.

"Structurally, the index remains weak with a lower-high formation intact, and the presence of an unfilled gap resistance at 23,400–23,600 suggests that any pullback is likely to face supply and be sold into. Momentum indicators remain bearish, with RSI once again slipping back into oversold territory, after facing rejection near 40, while India VIX has surged above 20 (+21.79%), signaling heightened volatility and risk aversion," said Dhupesh Dhameja, Derivatives Research Analyst, SAMCO Securities.

"Going ahead, markets appear to be in a phase of heightened fragility, where sentiment is being driven by rapidly evolving geopolitical developments and sharp rise in crude prices. Given the intensifying tensions around energy infrastructure in West Asia, we remain cautious on the market in the near term and expect volatility to persist," said Siddhartha Khemka - Head of Research, Wealth Management, Motilal Oswal Financial Services Ltd.