MUMBAI: Market players are keeping their fingers crossed as investors are weighed down by the continuing bearish sentiment due to a combination of domestic and global factors. Continuous foreign fund selling, weakness of the rupee, the escalating tariff war that was started by the US and a not-so-good quarterly corporate results have pulled the sensex and nifty down by around 2.5% each last week. Investors do not see any positive trigger that could stop the slide.
“These declines stem from concerns over US tariff policies and slowing corporate earnings, leading to widespread sell-offs, particularly in small-cap stocks,” said Krishna Appala, senior research analyst, Capitalmind Research in a note.
On Friday, while the sensex ended at 75,939 points, the nifty ended at 22,929 points. Foreign funds have been the largest sellers in the Indian market so far this year with the net outflow already over Rs 1 lakh crore, data from NSDL and BSE showed.
Of the total in Feb so far, the net outflow is nearly Rs 21,300 crore. Next week’s trading trend, like in the past few weeks, is expected to be determined by trading pattern by foreign fund managers, market players said.
The ongoing tariff war that was started by US President Donald Trump after assuming office on Jan 21, is yet to take a definite shape. So the related uncertainties are weighing heavily on markets around the world. Till there is some stability or certainty relating to US’s trade relations with its other major trading partners, investors will remain cautious and prefer to avoid ‘risk on’ trades, market players said.
Technically too the indices are at weak positions, chartists said. “From a technical standpoint, any decisive breakdown below the 22,800-22,700 points zone (lower band for Nifty) could trigger fresh room for 22,500-22,400 in the near period, potentially a decline of nearly 15% from the all-time high,” said Osho Krishnan, senior analyst, technical & derivatives of Angel One.
“On the flip side, a series of resistances could be seen, starting from 23,300-23,350, followed by 23,500 points. Only a breach of these levels could provide some relief for the market participants.”