Share market fall: The Indian stock markets saw a sharp decline on 22 May today. Conflicts about selling in global markets and increasing fiscal deficits in the US weakened the notion of investors. During the trading, the Sensex fell to 869 points to a low of 80,727.11. At the same time, the Nifty fell 271 points to 24,541.60. Although both index recovered some extent by 10:30 am, the Sensex still fell at 80,873.10 and the Nifty fell 220 points to trade at 24,592.55.
This decline was all -round. All 13 main sectoral index of NSE were trading in red mark. Midcap and smallcap stocks also under pressure. Shares of Power Grid, Tech Mahindra, HCL Tech, Nestle India and Hindustan Unilever should be included in the top losis.
There were 4 main reasons behind this decline in the stock market-
1. America’s financial position and bund yield boom
The biggest reason behind today’s decline in the stock market was the increasing concern about America’s deteriorating financial health. The US government is working on a new budget, which includes a tax cut off. Market analysts fear that this proposal may increase the US federal deficit. Last week, Global Rating Agency Moody’s also reduced the ratings of the US date outlook, which has weakened the trust of investors.
VK Vijaykumar, Chief Investment of Geojit Financial Services, said, “The biggest issue is America’s huge fiscal deficit, which is now becoming unstable. The bounce in the bond yields of 5-sal, 10 years and 30-sight shows the declining trust of investors. It is also affecting the emerging markets like India.”
2. Weak Global Signs
The effect of selling in America’s Wall Street was also seen in Asian markets. Japan’s Nikkei 225 index, South Korea’s KOSPI index and Hong Kong’s Hang Seng Index, all fell by more than 1%. Prashant Tapse of Mehta Equality said, “The stock market is under pressure again after a little recovery on Wednesday. America’s debt crisis, in many areas are pointing to the increase in Kovid cases and technical indicators selling.”
3. IT shares fall drastically
Economic uncertainty in the US can also affect the earnings of Indian IT companies, which saw pressure in this sector today. The Nifty IT index was trading in the red mark. Tech Mahindra’s stock fell more than 2% to ₹ 1,564.70. Percentage Systems, HCL Tech and MPAssis also declined by more than 2 percent.
4. India Vix boom
The India Walletality Index, which indicated the nervousness of the investors, saw a boom on Thursday. In early trade, India Vix recorded a rise of 2.8% and reached 18.04. However, it later cooled down until 17.54. The increase of VIX shows that uncertainty in the market is increasing and investors are taking alert stance.
What does technical experts say?
Anand James, the chief market strategist of Zeepled, said that the recent recovery of the Nifty could not last much and it is still in the consolidation phase. He said, “The Nifty failed to cross the upper level on Wednesday and a ‘green hammer candle’ has been made on the chart due to the reservation trades that stop it. This indicates that the market is still in balance. 80% shares of NIFTY 500 are still above their 10-day simple moving average, which remains expected in the worker.”
He estimated that the Nifty may be consolidated within 24,677 to 24,950 in the near future, while trading in a broad rage of 24,060 to 25,235 is also possible.
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