 "Sensex dips 800 pts intraday, Nifty nears 21,800: Why is market falling?")
Stock market updates on May 13, 2024: Indian equities continued their downward trend on Monday, May 13, amid caution ahead of the Lok Sabha election results. Additionally, offloading of shares by foreign institutional investors (FIIs), and lacklustre Q4 results from blue-chip companies, further dampened the market sentiment.
The S&P BSE Sensex fell by 780 points or 1.07 per cent to hit an intraday low of 71,882.90. Similarly, NSE's Nifty50 dropped by 220 points or 1.02 per cent to 21,828.40 levels.
Leading the decline were stocks such as Tata Motors, Reliance Industries, SBI, ICICI Bank, and Bharti Airtel.
With the exception of HUL, Asian Paints, HDFC Bank, and Sun Pharma, all other stocks in the 30-share Sensex were trading in the red.
Ambareesh Baliga, an independent analyst, attributed the market decline to fears that lower seats won by the ruling Bharatiya Janata Party (BJP) may derail policy continuity.
"There is a lot of nervousness among investors. The markets may remain under pressure in the near-term, and the Nifty may drop further to 20,500-21,000 ahead of the results," he said.
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Baliga advised investors to stay on the sidelines till the election results are announced. "Even if the BJP-led NDA wins 300-320 seats, it's a decent number. Markets may rebound thereafter," he added.
That apart, delay in interest rate cuts, and the allure of higher returns in the relatively cheaper Chinese market compared to India, are keeping investment sentiment in check.
According to V K Vijayakumar, chief investment strategist, Geojit Financial Services, the FPI selling is due to a change in FPI stance from 'sell China, buy India' earlier to 'sell India, buy China' now.
This change in stance, Vijayakumar believes, has been caused by the recent outperformance of China (Shanghai Composite up by 3.96 per cent and Hang Seng up by 10.93 per cent last one month) and underperformance of India (Nifty down by 2.06 per cent last one month).
"This is likely to be a near-term trend triggered by the cheap valuations of Chinese stocks and the relative high valuations of India. It is important to understand that India’s long-term prospects are much better than China’s," he added.
On May 10, FIIs offloaded shares worth Rs 2,117.50 crore, taking the month-to-date selling to Rs 24,975.5 crore.
From a technical perspective, Prashanth Tapse, senior vice president of research at Mehta Equities Ltd said, "Options data suggests Nifty’s trading range at 21,700-22,500, with notable resistance at 22,500 and support at 21,800. A recommended strategy involves buying Nifty on dips within 21,700-21,750, targeting 22,300/22,601, with Bank Nifty advised for buying within 46,900-47,100, targeting 47,951/48,301".
That said, analysts said Nifty has entered an oversold region and the downside looks limited from current levels. The index may recover if it holds above 21,700 on a daily closing basis. Investors may keep stop loss at 21,700.