After Five-Day Surge, D-Street Slips Through Ceasefire Cracks
Mumbai: Investor sentiment took a hit on Dalal Street as cracks appeared in the US/Israel and Iran ceasefire just one day post-announcement. This development, alongside ongoing geopolitical tensions, compelled participants to book profits after a strong five-day rally. Both Nifty 50 and Sensex closed about 1% lower, ending their upward streak in light of these recent events.
Market Performance Highlight
– Nifty 50: Fell 222.25 points, or 0.9%, closing at 23,775.1.
– BSE Sensex: Declined 931.25 points, or 1.2%, ending at 76,631.65.
– Both indices had previously gained nearly 4% in the last session.
Wednesday’s robust rally led to profit booking, fueled by renewed uncertainty surrounding the ceasefire. This uncertainty caused a spike in crude oil prices, which is making investors cautious, said Sunny Agrawal, head of research at SBI Securities.
Tensions have flared up in West Asia, just a day after the US and Iran announced a ceasefire. Reports indicate that Israel continues its operations in Lebanon, while the Strait of Hormuz has reportedly been re-closed.
Crude Oil Prices React
As of Thursday evening, Brent Crude June Futures were trading close to $99 a barrel after dipping to a low of $90.4 on Wednesday.
Technical Insights and Market Outlook
Dharmesh Shah, head of technical research at ICICI Securities, indicated that the Nifty 50 is likely to find support in the 23,300-23,400 range with resistance around 24,500. Even though recent retracements of losses are promising, intermittent profit booking is expected. Volatility will likely remain high amid ongoing ceasefire uncertainties, Shah noted.
The Indian Volatility Index (VIX), known as the market’s fear gauge, increased by 3.7% to a level of 20.43, indicating a caution among investors.
Broader market indices showed a slightly positive trend:
– Nifty Midcap 150: Gained 0.3%
– Nifty Small-cap 250: Rose 0.1%
Among 4,420 stocks traded on BSE, 2,121 advanced while 2,180 declined, suggesting that despite weakness in major indices, mid-cap and small-cap stocks performed well. “Continued foreign investor selling has affected headline indices, but overall sentiment remains upbeat,” Agrawal added.
Looking ahead, we anticipate market stabilization in the coming 2-3 months, provided oil prices stay within manageable limits. Positive earnings in the fourth quarter across various sectors like banking, IT, automobiles, FMCG, and consumer discretionary are also expected, he stated.
Regional Market Overview
In the Asian market:
– Japan: Down 0.7%
– China: Down 0.7%
– Hong Kong: Down 0.5%
– South Korea: Down 1.6%
– Taiwan: Up 0.3%
In Europe, the pan-European Stoxx 600 index saw a decline of 0.6%. Foreign portfolio investors net sold shares worth ₹1,711 crore, while domestic institutions bought shares worth ₹956 crore.
As events unfold, the future trajectory of D-Street remains uncertain, heavily reliant on geopolitical developments and economic indicators.