The stock market experienced a significant decline on Friday, the 13th, with widespread selling across various sectors. Here’s an in-depth look at the reasons behind the fall and key takeaways for investors.
Sensex and Nifty Performance
- Sensex: Dropped 943.10 points (1.16%) to close at 80,346.86.
- Nifty: Fell 284.75 points (1.16%) to settle at 24,263.95.
Major Movers
- Decliners: Tata Steel and JSW Steel dropped by 3% each, while private lenders like IndusInd Bank and Axis Bank fell by up to 2.5%. NTPC, Bajaj Finserv, Mahindra & Mahindra, and ITC slipped by up to 2%.
- Exceptions: Bharti Airtel was the only stock that avoided a decline from the Sensex pack.
Key Factors Behind the Fall
1. Foreign Portfolio Investor (FPI) Selling
- FPIs sold equities worth ₹3,560 crore on Thursday, December 12.
- Strengthening of the US Dollar made Indian equities less attractive, especially given high valuations.
2. Global Market Trends
- Asian markets in China, Hong Kong, and Japan saw declines due to the lack of fresh fiscal stimulus announcements from China’s Central Economic Work Conference.
- Concerns over a potential trade war between the US and China further dampened investor sentiment.
3. US Economic Indicators
- US Dollar Index: Rose by 0.15% to 107.11, making it stronger against major global currencies.
- US 10-Year Bond Yield: Increased to 4.324%, signaling higher borrowing costs and reduced appetite for equities.
4. Valuation Concerns
- High valuations in India prompted profit booking by investors.
- Sectors like industrials, trading at a premium, are expected to see mean reversion.
Technical Analysis
Key Support Levels
- Immediate support for Nifty lies at 24,500, with critical support in the range of 24,360–24,445.
- Risk Management: Traders are advised to maintain a stop-loss at 24,000 on a closing basis.
Expert Insights
- Sameet Chavan of Angel One emphasized the importance of monitoring the 24,400–24,700 range, as it could determine next week’s market momentum.
- Akshay Chinchalkar from Axis Securities pointed out nervousness among market participants, as evidenced by higher selling participation.
Nifty Valuations and Investor Strategy
- Valuation: At 19.5x FY26E and 17x FY27E P/E, Nifty valuations are reasonable given expected mid-teens CAGR earnings growth from FY23–FY27.
- Sector Watch: Broad-based earnings growth provides stability, though some industrial sectors are trading at a premium.
- Investment Advice:
- Investors should continue allocating funds via Systematic Investment Plans (SIPs).
- Prefer large-cap, Flexi-cap, and Multi-cap diversified funds for new investments.
Conclusion
Friday’s market fall underscores the impact of global trends, valuation concerns, and technical indicators on Indian equities. While short-term volatility persists, long-term investors are encouraged to stick to their strategies, focusing on systematic investments and diversification.
Disclaimer: The information provided in this article is for informational purposes only and should not be considered investment advice. Investors are encouraged to consult a financial advisor before making any investment decisions.