Over the last 10 days, Sensex was gaining continuously. It registered over 1,000- points fall this Thursday breaking its gaining streak. Global cues and profit bookers may keep the domestic equity market under pressure even then. Technical and fundamental analysts both are predicting a further correction in the market ahead.
More About The Sensex Situation :
Gaurav Dua, SVP, Head of Capital Market Strategy and Investments, Sharekhan by BNP Paribas made a statement. He said, “We see that there is a scope for 3-4 percent fall from the current situation before things get better and stabilize.” However, he advises that this time, investors should buy quality stocks. They should invest in ICICI, Infosys, and Cipla in case of any fall further. Major selling in stocks of IT and Banking weighed on the domestic indices on Thursday. This is due to dull hopes of further stimulus in the US and comeback of the COVID-19 cases across the globe impacted sentiments.
Senior Analyst at YES Securities, Aditya Agarwala said Nifty designed a big bearish flooding pattern. He said this referring to Thursday’s case. He said it is likely that in the weekly time frame, the index is forming a pattern of dark cloud cover. This signifies tweaking uptrend. A Bearish Engulfing pattern is a bearish reversal pattern. This usually happens at the top of an uptrend.
The Cause And Effects:
On Thursday, US stocks also fell down as an unexpected rise in weekly unemployed claims. Steven Mnuchin, Treasury Secretary dashed hopes for any governmental aid before the elections. Geojit Financial Services’ Head of research, Vinod Nair said, “In the expectation of a high stimulus, the market had moved-up.
But the hopeful fiscal package was not declared in India and a delay in the US and Euro has recently changed the trend. Meanwhile, the speed of economic recovery is under pressure due to a resurgence of a high quantity of Covid cases, resulting in high economic restrictions.” The domestic equity market is not looking in a comfortable position. The 30-share index traded at a 29.10 price-to-earning ratio. it is against its long-term 10-year average of 20.93 times. From 29 September to 14 October, the 30-share Sensex and 50-share Nifty index had increased 7 percent.
The NSE Nifty index settled 290.70 points which are 2.43 percent, down at 11,680 on Thursday. Barring Asian Paints which is up 0.32 percent, the other 29 components in Sensex settled in the red. IndusInd Bank, ICICI Bank, Tech Mahindra, State Bank of India, Bharti Airtel, Reliance Industries, all cracked between 3 to 5 percent.