Dear
Trader…
The 30-share BSE Sensex fell 1,017 points, or 1.24%, to
settle at 81,183, while, the broader NSE Nifty Future dropped 330 points, or 1.31%, to close at 24,906.
The market capitalisation of all listed companies on BSE
declined by Rs 5.2 lakh crore to Rs 460.46 lakh crore.
Reliance Industries, ICICI Bank, SBI, and Infosys alone
contributed 538 points to the Sensex’s total decline. Additionally, ITC, HDFC
Bank, L&T, and Axis Bank were also major contributors to the index’s fall.
Sector-wise, the Nifty PSU Bank and Oil & Gas indices
dropped by over 3.6% and 2.2%, respectively.The Auto, Bank, Financial Services,
Media, IT, Realty, and Consumer Durables sectors declined by 0.8% to 1.7%.
Domestically-focused small-caps fell by 1.25%, while mid-caps slid by 1.6%.
Why is the market falling today?
1)
Nervousness builds ahead of key US
jobs data – Investors grew increasingly nervous ahead of the
US non-farm payrolls report, due later today, leading to a decline in Indian
equity markets. Federal Reserve Chair Jerome Powell recently emphasized that
policymakers do not welcome further weakening in the labor market, setting the
stage for a potential rate cut in September. Analysts expect a rise of 165,000
new jobs and a dip in the unemployment rate to 4.2%. However, concerns are
mounting after soft job openings and fewer gains in the private sector
increased the likelihood of a half-point rate cut to 42%.
2)
Decline in bank stocks ahead of loan
and deposit growth data – Indian equity indices
also fell as index heavyweight financial stocks dropped, driven by concerns
over upcoming data on bank loan and deposit growth, due later today.Meanwhile,
the latest Reserve Bank of India (RBI) data revealed that deposits grew by
11.7% in the June 2024 quarter, while bank credit surged by 15%. This widening
gap between deposit and credit growth has raised concerns about potential
liquidity issues, heightening investor anxiety and contributing to the decline
in bank stocks.
3)
Sebi’s deadline for FPI disclosure –
Friday marks the deadline for foreign investors
to disclose their beneficial owners. According to Sebi, failure to comply could
lead to the disqualification of FPIs from investing in India, requiring them to
wind up their investments. Experts have cited this as a likely factor in
today’s market selloff.This deadline is part of Sebi’s broader initiative to
prevent the misuse of the FPI route by anonymous investors, aiming to enhance
market integrity.
4)
Tepid global market mood – World shares held near three-week lows on Friday, the
dollar nursed losses and crude oil languished near this year’s lows, as
investors waited for U.S. jobs data that could decide the size and speed of
coming rate cuts in the world’s largest economy. European shares opened lower
and slipped for a fifth straight session on Friday. The pan-European STOXX 600
index was last down 0.6%. Meanwhile, the Nikkei dropped 0.7% as the yen jumped,
weighing on the outlook for Japanese exports. The index is down about 4% this
week. Ahead of the announcement key US job data, U.S. equity markets meandered
downwards. Nasdaq futures fell 1.15%, while S&P futures slipped 0.6%.
5)
FIIs turn net sellers – The foreign
institutional investors (FIIs) turned net sellers on September 5 as they sold
equities worth Rs 688 crore, while domestic institutional investors bought
equities worth Rs 2,970 crore on the same day.
Nifty futures opened at 25189 points against the previous
close of 25236 and opened at a low 24855 points. Nifty Future closed with an
average movement of 364 points and a decline of around 330 points and closed 24906
points…!!
Meanwhile,
if the August jobs data, due later today, falls
short of expectations and unemployment rises higher than forecast, the Fed may
cut by 50 basis points. However, this may not be well-received by the market,
as serious growth concerns and fears of a hard landing for the US economy could
weigh heavily.
The domestic market experienced panic today due to SEBI’s deadline
on FII disclosure norms. However, this is not expected to impact India’s
attractiveness to FIIs in the long term.
Technically, the
important key resistances are placed in Nifty future are at 24906 levels, which
could offer for the market on the higher side. Sustainability above this zone
would signal opens the door for a directional up move with immediate
resistances seen at 25088 – 25202 levels. Immediate support is placed at 25808 –
25676 levels.
Past Performance is not an Indicator of Future Returns.
The securities quoted are for illustration only and are not recommendatory. Investment
in securities market are subject to market risks. Read Disclaimer and related
all the documents carefully before investing, mentioned on www.nikhilbhatt.in
