Will Market Crash Again? Sensex Sharp Plunge of 856.65 Points, Nifty Dives Below 22,600 – Will You Profit from This Rout?
Are You Worried About the Market Fall?
The Indian stock market experienced a sharp fall on Monday, with the Sensex crashing by 856.65 points to close below the 75,000 mark at 74,454.41, while the NSE Nifty declined 242.55 points to end the day below the 22,600 level at 22,553.35. This dramatic decline has left investors wondering what caused the market to drop so sharply.
Why Did the Market Fall Today?
The domestic equities markets were down on Monday, taking cues from the US market which slumped in the previous trade amid concerns over softening consumer demand as well as tariff threats. The US consumer sentiment has hit a 15-month low as inflation in America is expected to rise due to additional tariff measures.
A Recipe for Disaster: Stagflation in the World’s Largest Economy
Stagflation, a situation in which the economy faces slowing growth and rising prices, in the world’s largest economy US is a troubling sign for India’s export-driven sectors, particularly IT. This means that Indian companies may find it challenging to maintain their growth momentum, and their profits may be impacted.
Experts Weigh In: Market Analysts Share Their Insights
Vinod Nair, head of research at Geojit Financial Services, expects the pace of earnings downgrades to ease, supported by increased government spending, lower interest rates, and tax reductions. These factors are likely to provide a boost to sectors such as FMCG, consumer discretionary, and banking.
Vaibhav Vidwani, research analyst at Bonanza, notes that the downturn was largely influenced by ongoing foreign institutional investor (FII) selling, which has been persistent due to global market dynamics favoring the US and China. He expects investors to remain cautious about US tariff policies and await signs of economic growth in India.
Technical Analysis: A Look at the Charts
Rupak De, senior technical analyst at LKP Securities, believes that the Nifty has broken down from a bearish flag and pole pattern, signaling the start of a correction. He expects the index to continue declining in the short term, moving toward lower levels.
Hrishikesh Yedve, assistant vice-president (technical and derivatives research) at Asit C Mehta Investment Interrmediates, notes that the index has formed a red candle, indicating weakness. He expects the 22,700-22,800 range to serve as a solid resistance zone, and the index will find initial support at 22,500, followed by the 22,050 level.
Conclusion
The sharp decline in the Indian stock market has left many investors worried about their investments. However, market experts believe that the pace of earnings downgrades is expected to ease, supported by increased government spending, lower interest rates, and tax reductions. Investors are advised to remain cautious and monitor the market closely to identify potential trading opportunities. Will you profit from this rout?
