Indian equity markets witnessed a sharp selloff on Thursday, November 28, as benchmark indices Sensex and Nifty declined nearly 1.5 percent, in steepest single-day fall in nearly 2 months. A combination of weak global cues, profit-booking ahead of the monthly F&O expiry, and sectoral pressures led by IT and auto stocks weighed on sentiment.
This was the biggest fall since October 3 -- when benchmark indices lost about 2.1 percent. Today's crash resulted in BSE-listed companies erasing Rs 2.7 lakh crore in combined market capitalisation.
The BSE Sensex closed 1,190 points lower at 79,044, while the NSE Nifty shed 361 points to settle at 23,914, slipping below the crucial 24,000 mark. Despite the decline, market breadth stayed marginally positive, with 2,156 shares advancing against 1,632 declining, and 101 unchanged.
A key technical factor that amplified selling pressure today was the monthly F&O expiry. Ajit Mishra, SVP Research at Religare Broking, said, “Bears appeared to carry over their short positions, as profit-booking dominated today’s session.” Foreign institutional investors (FIIs) were likely net sellers, offsetting selective buying by domestic institutions.
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Otherwise, there was no apparent reason for today’s across the board selling, traders said. But continuing concerns over Trump policies weigh on market sentiment.
Although there was selling across the board in Nifty stocks, and across indices, the top five losers -- Infosys, Reliance Industries, HDFC Bank, ICICI Bank, and Mahindra & Mahindra -- contributed to 40 percent of the losses.
IT and auto stocks lead losses today
IT stocks led the downturn as concerns mounted over slower rate cuts in the US. There are contradictory narratives around IT stocks. Some sections of the markets are placing bullish bets, relying on higher IT spends by US companies following possible tax cuts by Trump. Others are betting on lower valuation because of lower benchmark rates.
Today, bearish bets won with the Nifty IT index falling 2.4 percent. Infosys (-3.5 percent), TCS (-1.8 percent), and HCL Tech (-2.5 percent) were among the top losers. Auto stocks also suffered, with the sectoral index declining 1.6 percent. Mahindra & Mahindra (-3.4 percent) was the worst performer in the auto pack, following news that it may be subject to Rs 1,800 crore in penalty for having higher than mandated emission norms in FY23 as reported by The Indian Express.
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Other prominent losers in the auto pack were two-wheeler makers Eicher Motors (-2.1 percent), Bajaj Auto (-1.9 percent) and Hero Motocorp (-1.8 percent), which were all weighed down by concerns over intensifying competition.
Stocks that bucked today’s losing trend
Very few stocks escaped the slaughter today. Nifty PSU Banks, Nifty Media, and Nifty Realty ended in the green. Broader indices Nifty Midcap 250, Nifty Smallcap 250 and Nifty MidSmallcap 400 clocked gains, suggesting that retail investors were lending support to stocks. Adani Enterprises (up 1.6 percent) was also the most actively traded stock by value today, followed by HDFC Bank, ICICI Bank and Reliance.
Market outlook
Although today’s volatility was amplified by profit-booking ahead of expiry, traders said markets continue to be fragile. Although traders did not pin the market fall on the escalating conflict -- Russia’s launch of ‘massive strike’ on Ukraine's energy infrastructure, as reported by BBC earlier today, it will weigh on market sentiment, they said. The coordinated assault, involving drones and missiles, hit multiple cities over several hours -- the second such attack this month.
Besides, the market will also dance to the tunes around the rate trajectory. Krishna Rao, co-head of equity broking at JM Financial Services, said, “Markets are reacting to expectations of a slower pace of rate cuts, given strong US growth and potential inflationary pressures.” The US Federal Reserve’s preferred inflation gauge, the Core PCE Price Index, rose 2.8 percent year-on-year in October, dampening hopes of immediate rate cuts.
The 24,350 level serves as a critical resistance for Nifty, with the index repeatedly failing to breach it in recent trading sessions, traders said.
Heavy call option writing around the 24,300-24,400 zone shows significant bearish efforts to defend this price level from bullish advances, said Vishnu Kant Upadhyay, AVP - Research & Advisory at Master Capital. "On Thursday, there was fresh open interest (OI) build-up at these strikes, clearly indicating that bears continue to dominate the market sentiment," he added.
Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
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