Why Sensex fell over 700 pts, Nifty slipped below 25,200 intraday today

Stock Market today, Sensex, Nifty fall: The Indian bourses retreated heavily on Wednesday following a similar slump in the global markets. The benchmark index BSE Sensex slipped around 722 points ato 81,833.7 level intraday levels, while the Nifty50 plummeted nearly 200-odd points or 0.77 per cent to 25,083.8 in intraday trade. 

The BSE Sensex, however, regained some lost ground to end 202.80 points or 0.25 per cent lower at 82,352.64, while the NSE Nifty50 settled 81.15 points or 0.33 per cent lower at 25,198.70 on Wednesday.

More than 30 out of the 50 Nifty stocks ended lower dragged by Wipro, Coal India, ONGC, Hindalco, and LTIMindtree with losses of up to 3.05 per cent.

Sectorallly, the Nifty PSU Bank, and the Nifty IT were the top laggards, down 1.6 per cent and 0.9 per cent, respectively. 

In the broader markets, the trend remained mixed as the BSE SmallCap index showed strength, rising 0.20 per cent while, BSE MidCap index fell 0.58 per cent in intraday deals. 

Why are markets falling today?

The downturn in the Indian stock market came after broad based selling in Asian as well as US peers. The underperformance was led by US tech stocks that slumped after recession fears made a comeback on fresh economic data.

The country’s ISM Manufacturing Index, also known as the Purchasing Managers' Index (PMI) came in at 47.2 per cent for August, a rise of 0.4 percentage points from July but falling short of Dow Jones' forecast of 47.9 per cent. Readings below 50 per cent indicate economic contraction, while those above 50 per cent signify expansion.

The ISM Manufacturing Index serves as a monthly barometer of US economic activity based on surveys of purchasing managers at manufacturing firms nationwide. 

This propelled selling in tech stocks within the US, chipmaker Nvidia experienced a drop of over 9 per cent negatively impacting other semiconductor companies, including Intel, AMD, and Marvell. 

Overnight on Tuesday, the Dow Jones Industrial Average fell 1.51 per cent, the S&P 500 dropped 2.12 per cent, and the tech heavy Nasdaq Composite lost 3.26 per cent.

Markets in Asia-Pacific also fell in line on Wednesday morning with Japan’s Nikkei dropping up to 3.76 per cent, and South Korea’s Kospi declining by 2.85 per cent among other Asian countries. 

What do analysts say?

According to analysts, the month of September has been a weak month for global markets, a truth that has held strong for the last four years with early trends suggesting a repeat of history. 

“There are indications of US manufacturing moving into contraction thereby threatening the soft landing expectation, which has been the pillar of support for the mother market US and consequently for other markets, too. Now there is a small question mark about this scenario. More data is needed to confirm this trend,” said V K Vijayakumar, chief investment strategist, Geojit Financial Services. 

In the Indian market context, Vijayakumar noted that the "buy on dips" strategy, which has been effective during this bull run, might continue to be successful. Retail investors waiting for a correction are expected to buy in on dips. However, whether this trend will sustain remains to be seen, he said. 

Adding further he said that in the present stage of the market where there is no valuation comfort in the broader market, quality large caps offer safety to long-term investors.

On the technical side, a direct fall below 25,070 for Nifty50 could usher in downsides aiming for 24,440 as the first downside objective, with 24,800 offering to slow down proceedings, said Anand James, chief market strategist, Geojit Financial Services

“Retention of 25,200 will however keep upside hopes alive, but will continue to insist on an hour’s close above 25280 to play the 25365-800 trajectory,” said James.