Stock Market Today: Sensex, Nifty likely to stay volatile amid global sell-off

Indian equity benchmarks, the Sensex and the Nifty50, are expected to remain volatile on Wednesday, tracking a sharp sell-off across global markets and lingering concerns over global trade tensions and weak quarterly earnings.

Gift Nifty today

Early cues were mildly positive. Gift Nifty was trading at 25,273, up 0.13 per cent, indicating a cautious start for domestic equities.

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Global markets set a weak tone

Asian markets were largely in the red in early trade. Overnight, US stocks ended sharply lower, with all three major indices logging their worst single-day fall since October 10.

In global markets, the Dow Jones slipped to a two-week low, the Nasdaq fell to a five-week low, and the S&P 500 touched its lowest level in a month. European markets were also under pressure, trading at two- to six-week lows, while Japanese equities declined for the fifth straight session.

Indian markets saw sharp sell-off on Tuesday

On Tuesday, Indian equities extended losses for the second straight session amid global risk-off sentiment and muted Q3 earnings.

The Sensex crashed 1,065.71 points, or 1.28 per cent, to close at 82,180.47. The Nifty 50 fell 353 points, or 1.38 per cent, to settle at 25,232.50.

The broader market witnessed panic selling. The Nifty 500 index dropped 1.8 per cent, with 469 out of 500 stocks ending in the red. As many as 71 stocks hit their 52-week lows, while 56 stocks traded more than 5 per cent above their recent lows.

Why markets fell despite limited FII selling

Market participants pointed out that Tuesday’s sharp fall was not driven by heavy foreign selling.

Foreign institutional investors (FIIs) sold just Rs 2,938 crore in the cash market. This level of selling is usually absorbed easily. The sharper pressure came from traders cutting leveraged positions.

Mark-to-market losses triggered margin calls. One by one, long positions were unwound. With buying support missing, especially from FIIs, panic spread quickly in mid and small-cap stocks. Heavy margin trading facility (MTF) positions also added to the pressure.

Bank Nifty shows relative strength

Despite broader weakness, Bank Nifty continued to show resilience.

The index declined for the second straight day and formed a lower high-lower low pattern. Out of 14 banking stocks, 13 ended lower. HDFC Bank was the lone gainer.

On the downside, Bank Nifty has a near-term support near its 50-day moving average and the January 9 closing level around 59,250. A stronger support zone lies in the 58,700–58,800 range, which has held eight times over the past two months.

Interestingly, PSU bank stocks touched fresh lifetime highs intraday before paring gains.

Sectoral pressure intensifies

Several sectoral indices slipped to multi-month lows.

The FMCG and realty indices hit their lowest levels in nine months. The energy index slipped to an eight-month low, pharma to a three-month low, and auto to a two-month low.

India VIX, the volatility gauge, rose for the fourth consecutive session. It jumped 7.6 per cent to close at 12.7 and touched a one-month high of 12.90 intraday.

FII-DII data: domestic funds stay strong

Domestic institutional investors (DIIs) continued to provide steady support.

DIIs bought shares worth Rs 3,665 crore on Tuesday, marking their 100th consecutive day of net buying. Over this period, domestic funds have invested a record Rs 3.46 lakh crore in equities.

FIIs, meanwhile, remained net sellers for the 11th straight session. Across cash, index futures, and stock futures, FIIs sold shares worth Rs 4,374 crore on a net basis. Their index futures long positions fell to 9.18 per cent from 9.49 per cent.

Global macro signals add to caution

The rupee slipped 6 paise to close at 90.98 against the US dollar, its weakest level since December 16 and just 10 paise away from its lifetime low of 91.08.

The dollar index closed below 98.5, a two-week low. US bond yields rose to 4.29 per cent, near a four-and-a-half-month high.

Gold and silver surged to fresh lifetime highs. Gold jumped to Rs 1,52,500 per 10 grams, while silver climbed to Rs 3,27,998 per kg. In just two days, gold gained Rs 8,050 and silver surged Rs 35,900.

Base metals such as aluminium, nickel, zinc, and lead fell between 1 per cent and 5 per cent. Crude oil hovered flat near the $64 per barrel mark.