Benchmark stock markets witnessed a sharp turnaround during Wednesday’s trading session, with the S&P BSE Sensex and NSE Nifty 50 witnessing a bloodbath.Udabur Investment
The S&P BSE Sensex plummeted 930.88 points or 1.30 per cent to 70,506.31, while the NSE Nifty 50 settled 302.95 points or 1.41 per cent lower at 21,150.15. This marked the worst session for the Nifty 50 in nine months.
The stock market began the day with both benchmark indices reaching new all-time highs, driven by robust gains in IT and consumer goods stocksPune Investment. However, a significant downturn across all heavyweight sectoral indices turned the market negative by the close of the trading session.
Multiple factors could have been responsible for today’s bloodbath on Dalal Street, including the resurgence in Covid-19 cases in India, the US, UK and other places in Asia.
However, traders suggested that it was triggered primarily by heavy profit booking by investors, who have been looking to capitalise on the dream stock market run.
Parth Nyati, founder of Tradingo, said, “Euphoria turned into a gut punch for the market today, as the Nifty tumbled 500 points from its peak to finish over 300 points lower.”
“While the reason for the sudden reversal remains unclear, several factors could be at play. The easy money sentiment buoyed by a buoyant primary market may have set the stage for a correction,” Nyati added.
“Additionally, tight liquidity among HNIs due to their involvement in IPOs could have contributed to the selling pressure. The recent rise in Covid cases may also be serving as a convenient excuse for some investors to exit,” he explained.
He went on to say that the Nifty is attempting to fill the gap formed around 21,000 following the US Federal Reserve’s meeting. “This zone between 21,000 and 20,950 is likely to act as strong support, with the 20-DMA at 20,700 offering further downside protection,” he said.
“For long-term investors, this dip presents a potential buying opportunity, while traders should remain cautious and wait for a clear direction to emerge,” Nyati added.
Shrey Jain, Founder and CEO SAS Online, agreed that there were several reasons behind today’s sudden drop, including concerns about a potential bubble forming in the smallcap sector, and people are also watching the increasing cases of the Covid sub-variant JN.1 in India.
Agra Investment