Stock market today : Indian equity benchmark indices, Nifty50 and BSE Sensex , tanked in trade on Tuesday afternoon, influenced by subdued global market conditions, selling pressure, and reserved approach from institutional investors. While Nifty50 went below 24,700, BSE Sensex gave up the 81,200 level. Nifty50 ended the day at 24,683.90, down 262 points or 1.05%. BSE Sensex closed at 81,186.44, down 873 points or 1.06%.
Stocks of major companies like HDFC Bank, Reliance Industries and ICICI Bank declined.Market experts indicated that investors engaged in profit-taking whilst awaiting additional information regarding the India-US trade agreement.
Investors engaged in profit-taking and maintained caution due to the absence of significant positive catalysts and ongoing uncertainty regarding US fiscal stability.
According to Vinod Nair, Head of Research at Geojit Investments Limited, market participants exercised restraint whilst awaiting additional information about the India-US trade agreement.
"Given the current premium valuations and delays in the trade deal, we foresee a phase of short-term consolidation, which may lead FIIs to scale back their positions in the domestic market," he added.
Why stock market fell today: Top 5 reasons
1. US Government Rating Downgrade by Moody's
Market sentiment weakened following Moody's decision to lower the US government's credit rating to Aa1 from AAA, citing increasing debt worries. This action led to an uptick in bond yields, with the 30-year Treasury yield reaching 5.03%, the peak since November 2023. The yield surge has sparked concerns about diminished global market liquidity, potentially affecting emerging economies including India.
2. Institutional Investment Shifts
Foreign Institutional Investors (FIIs) demonstrated caution by withdrawing Rs 526 crore on May 19, whilst Domestic Institutional Investors (DIIs) also reduced holdings by Rs 238 crore. This synchronised selling by both institutional categories occurred for the first time in more than a month.
The current year's data shows FIIs have sold Indian equities worth Rs 1.09 lakh crore net, whereas DIIs have acquired Rs 2.30 lakh crore net, suggesting a reduction in the protective buffer provided by domestic investment flows.
3. Market Correction Following Strong Performance
The Indian markets experienced a pullback after a substantial 4% gain that followed the Operation Sindoor ceasefire. This correction came as valuations reached high levels, with BSE-listed companies adding Rs 27.3 lakh crore in market value over nine trading sessions. The decline on Tuesday reflected investors' decisions to secure gains at these higher price points.
4. Impact of Major Stocks' Performance
The market indices declined due to selling in prominent companies. Key contributors to the downturn included HDFC Bank, Reliance Industries, ICICI Bank, M&M, Maruti, and Bajaj Finance. Eternal (formerly Zomato) shares declined by approximately 4% due to concerns regarding a potential $1.3 billion outflow following its transition to an Indian Owned and Controlled Company (IOCC).
Jefferies reports indicate that Eternal could face removal from MSCI indices as foreign ownership approaches the regulatory ceiling of 46.5%. As of March, foreign ownership stands at 44.8%, with analysts suggesting this percentage has likely increased towards the limit.
5. Nifty Indicators
Market experts indicated that Nifty showed signs of being overbought in the near term, as evidenced by Monday's bearish candlestick and inside bar formation, which suggested uncertainty in market direction. The index displayed weakness on Tuesday when it couldn't sustain above 25,000 and declined below the crucial support range of 24,900-24,800, indicating deteriorating momentum and leading traders to adopt a cautious stance.
Stocks of major companies like HDFC Bank, Reliance Industries and ICICI Bank declined.Market experts indicated that investors engaged in profit-taking whilst awaiting additional information regarding the India-US trade agreement.
Investors engaged in profit-taking and maintained caution due to the absence of significant positive catalysts and ongoing uncertainty regarding US fiscal stability.
According to Vinod Nair, Head of Research at Geojit Investments Limited, market participants exercised restraint whilst awaiting additional information about the India-US trade agreement.
"Given the current premium valuations and delays in the trade deal, we foresee a phase of short-term consolidation, which may lead FIIs to scale back their positions in the domestic market," he added.
Why stock market fell today: Top 5 reasons
1. US Government Rating Downgrade by Moody's
Market sentiment weakened following Moody's decision to lower the US government's credit rating to Aa1 from AAA, citing increasing debt worries. This action led to an uptick in bond yields, with the 30-year Treasury yield reaching 5.03%, the peak since November 2023. The yield surge has sparked concerns about diminished global market liquidity, potentially affecting emerging economies including India.
2. Institutional Investment Shifts
Foreign Institutional Investors (FIIs) demonstrated caution by withdrawing Rs 526 crore on May 19, whilst Domestic Institutional Investors (DIIs) also reduced holdings by Rs 238 crore. This synchronised selling by both institutional categories occurred for the first time in more than a month.
The current year's data shows FIIs have sold Indian equities worth Rs 1.09 lakh crore net, whereas DIIs have acquired Rs 2.30 lakh crore net, suggesting a reduction in the protective buffer provided by domestic investment flows.
3. Market Correction Following Strong Performance
The Indian markets experienced a pullback after a substantial 4% gain that followed the Operation Sindoor ceasefire. This correction came as valuations reached high levels, with BSE-listed companies adding Rs 27.3 lakh crore in market value over nine trading sessions. The decline on Tuesday reflected investors' decisions to secure gains at these higher price points.
4. Impact of Major Stocks' Performance
The market indices declined due to selling in prominent companies. Key contributors to the downturn included HDFC Bank, Reliance Industries, ICICI Bank, M&M, Maruti, and Bajaj Finance. Eternal (formerly Zomato) shares declined by approximately 4% due to concerns regarding a potential $1.3 billion outflow following its transition to an Indian Owned and Controlled Company (IOCC).
Jefferies reports indicate that Eternal could face removal from MSCI indices as foreign ownership approaches the regulatory ceiling of 46.5%. As of March, foreign ownership stands at 44.8%, with analysts suggesting this percentage has likely increased towards the limit.
5. Nifty Indicators
Market experts indicated that Nifty showed signs of being overbought in the near term, as evidenced by Monday's bearish candlestick and inside bar formation, which suggested uncertainty in market direction. The index displayed weakness on Tuesday when it couldn't sustain above 25,000 and declined below the crucial support range of 24,900-24,800, indicating deteriorating momentum and leading traders to adopt a cautious stance.
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