Nifty extends losses, Sensex down 2,800 points in 6 days as investors brace for deeper correction

Analysts say this fall is a “natural cycle of profit-taking” from high valuations.

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Benchmark share market indices continued to falter on November 14, with NSE Nifty 50 closing in red for the sixth consecutive session and Sensex losing 2,800 points in as many days. The market sentiment remained under pressure from sustained selling by foreign institutional investors. Analysts described this fall as a “natural cycle of profit-taking” from high valuations.

With Nifty briefly dipping below the critical 23,500 mark, analysts warn that the correction in Indian equities could deepen as domestic and global headwinds persist. Nifty has plunged more than 10 percent from its September high of 26,277.35, entering correction territory for only the second time since the COVID-19 selloff in March 2020.

Today at close, Sensex shed 111 points or 0.14 percent to 77,580, and Nifty fell 26 points to 23,533. Market breadth was in favour of gainers, with 2,022 shares advancing, 1,768 declining, and 87 unchanged.

Correction natural, signals healthy profit-taking

Analysts attribute the correction to multiple factors, including weak September earnings, ongoing foreign portfolio investor (FPI) outflows, and rising inflation. Chris Wood, Global Head of Equity Strategy at Jefferies, described the correction as “healthy,” citing it as part of a natural adjustment in the Indian market after a prolonged rally.

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He added that the domestic inflows supporting Indian equities have provided a cushion. However, on the other hand, the markets have felt the impact of persistent foreign outflows, which have totaled about $14 billion since late September, according to Reuters.

Luke Barrs, Global Head of Fundamental Equity Client Portfolio Management at Goldman Sachs Asset Management, said that the Indian market’s recent multiples of 22-23x forward earnings have now led to profit-taking. “This pullback is a natural part of the cycle,” he said, as investors take note of weak corporate earnings.

Valuation pressures, global factors weigh on sentiment

With rich valuations now facing macroeconomic uncertainties, experts warn that pressures could continue to mount. Further, the correction in Indian equities comes amid persistent global headwinds, notably from a strengthening US dollar and rising bond yields.

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V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services, said that the US dollar index at 106.61 and the 10-year bond yield at 4.48 percent are significant hurdles for Indian markets. Emerging-markets face renewed pressures with expectations of pro-growth economic policies from US President-elect Donald Trump’s administration.

Nifty support, resistance levels to watch

Dhupesh Dhameja, Derivatives Analyst at SAMCO Securities, pointed out significant call writing around the 24,000 mark on Nifty contracts, which is creating resistance for any upward movement. “If Nifty fails to hold the 23,500 level, we may see further declines, with support likely at 23,300 and 23,000,” he said.

Sameet Chavan, Head of Research, Technical and Derivative at Angel One, said the immediate resistance is at 23,800, with further resistance around 24,000.

Kranthi Bathini, Director of Equity Strategy at WealthMills Securities, added that while midcap resilience offers some comfort, Nifty's sustainability around its 200-day moving average (DMA) will be crucial. If the index holds this level, he expects a potential quick bounce back, especially as broader market participation strengthens.

Shift in market sentiment from ‘buy the dip’ to ‘sell on rise’

As investors grow more cautious, the approach to market dips has shifted. “The sentiment has decisively moved from ‘buy the dip’ to ‘sell on rise’,” said Kunal Rambhia, Fund Manager at The Streets.

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.