Nifty cracks over 1% after 3 days of gains: What's fuelling losses today?
Even though the recent US data has put pressure on the dollar index and US bond yields, the ma
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Indian equities in Friday's session (January 17) traded with a cut amid mixed global cues after three consecutive days of gains. At around 11:31 am, the Nifty50 index was down 0.7 per cent or 163.45 at 23,148.35, while the BSE 30-share index fell 0.78 per cent or 602.25 points to 76,440.57. At the day's low, Nifty fell up to 251 points or over 1 per cent.
Even though declining dollar index and US bond yields are positive, the declines are not adequate to arrest the sustained selling by FIIs. Therefore, any significant recovery in the market will be sold into, said Dr. V K Vijayakumar, Chief Investment Strategist, Geojit Financial Services:
Here are the likely reasons for the fall today:
IT pack puts pressure
Even as Infosys posted a better-than-expected Q3 show, the IT index emerged as the standout underperformer. At the last count, Nifty IT was down as much as 2.62 per cent, while at the day's low the index hit levels of 41,963.
Barring, L&T Technology Services, all of the remaining 9 constituents traded in the red, with Infosys leading the losses with a cut of up to 6 per cent.
"A general slowdown in the global economy has led to reduced IT spending by businesses. Companies are tightening budgets and delaying technology investments, which directly impacts IT service providers and software vendors. Increased inflation rates have raised operational costs for IT companies, affecting profit margins," said Atul Parakh, CEO of Bigul.
FII selling continues relentlessly
In January thus far, FIIs have continued to sell Indian equities on each of the trading sessions except one. Thus far, foreign portfolio investors have net sold equities worth Rs 43,258 crore. The factors driving their exodus on the D-Street include slow GDP growth, high US bond yields, tariff fears as well as weakening earnings.
Mixed global cues
Asian stocks traded lower in early trade tracking overnight losses on Wall Street, even as bond yields dropped amid increasing bets that the US Federal Reserve will resort to interest rate cut in June. Furthermore, traders are awaiting a slew of Chinese data scheduled today including fourth-quarter GDP data.
Moreover, investor sentiment has turned cautious ahead of Donald Trump's second term as the US President, as he is set to take office on Monday, January 20.
Technical factors
Anand James, Chief Market Strategist, Geojit Financial Services said, "The 23370 barrier that we have been eying for the last few days, held true yesterday. While a pull back is in play now, favoured view expects bulls to attempt a regroup near 23290 and get back on to the 23550-640 trajectory."
However a direct fall below 23250 could potentially put an end to the recovery swing, re exposing 23000-22800, added James.
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