Indian stock markets fell
sharply today 29 October 2021 with Sensex slumping over 700 points to settle at
59306 while Nifty dropped nearly 200 points to 17670. Banking stocks led the
decline with SBI, HDFC Bank, ICICI Bank, Axis Bank and Kotak Bank falling
between 3% and 4% while ITC slumped over 5%. India's benchmark stock indexes
have risen more than 25% this year, driven by massive liquidity and huge retail
participation, raising concerns of overvaluations.
Relentless selling by FIIs is a key reason
for this correction in the market. FIIs had sold over ₹10000 crore
in Indian equities in past five sessions.
There is some exuberance in terms of valuations
in certain pockets of the market. In some pockets, there is still money to be
made, which will see some sectoral churn.
The broader markets too were under selling
pressure with BSE midcap and smallcap indices down about 1.5%.
We are seeing the first meaningful correction
in the market where Nifty has slipped below its 20-DMA that has opened the door
for further downside where rising 50-DMA will be the next support level that
may coincide with gap area around 17600 level while below this, 17400-17200 will
be the next support zone. On the upside, 18100-18300 has become an immediate
supply zone.
Inflation and slow down in global growth
momentum are other concerns amid expensive valuations. The rise in fresh covid
cases in some of the countries is also disturbing the mood of the investors. We
are in a structural bull market where intermediate corrections will be a part
of this journey and these kinds of corrections will provide good buying
opportunities in quality stocks.
The banking sectoral index Nifty Bank today
fell 400 points to 39443.
Banknifty is also showing
signs of topping out from the 39000 level. On the downside, 38500 will be an
immediate and important support level that may coincide with rising 20-DMA;
below this, we can expect further weakness towards 38000-37000. On the upside,
40000-41000 will act as a strong supply zone.
Adani Ports is abandoning its plans to build
a container terminal in Myanmar, pushing shares down about 7% today.
We expect the market to be volatile in the coming weeks and we expect selling pressure to continue in the broader market. We suggest investors be cautious on the market, look for profit booking and avoid buy on dip strategy. The global cues were also weak. Shares slipped today in Europe and Asia after a retreat on Wall Street pulled the S&P 500 and the Dow Jones Industrial Average back from their latest record highs. Globally investors are on the edge awaiting the US GDP data releasing later in the day along with the outcome of the Fed meeting scheduled for next week.
