Stock market crash: Weak bank earnings and high crude oil prices dealt a fresh blow to stock market bulls on Monday, pushing the Indian benchmark indices, Sensex and Nifty, almost 1 per cent lower.
Sectorally, the picture was mixed with Nifty Bank, Nifty Private Bank and Nifty Financial Services indices down over 1 per cent on the NSE. On the flip side, IT and PSU Bank indices added over 1 per cent each. The broader market sentiment was upbeat, gaining over 0.20 per cent each. Volatlity edged up higher by 3 per cent in early trade.
Globally, too, sentiment was bleak as investors assessed the tensions in the Middle East and oil price rise to above $90 per barrel after a month. A packed week of major tech earnings will further test investor faith in the AI trade.
Stock market crash: 4 key reasons explained
Here’s what is driving the Indian stock market lower today:
1. Oil back above $90
US President Donald Trump said that Iran had been hit ‘very badly’ in the wake of the American strikes and that it does not control the strait.
VK Vijayakumar, Chief Investment Strategist, Geojit Investments Limited, said that if this trend of higher crude oil prices continues, “India’s vulnerability to energy shock will resurface with negative implications for the rupee and FPI flows”. Rupee may weaken due to the spike in crude and FPIs may view this negatively, he added.
2. Banking pack weak
3. FIIs resume selling
Fresh spike in crude oil prices and weakness in rupee have once again turned foreign institutional investors (FIIs) wary of India as they have turned net sellers in the equity market over the last five sessions in July. During this period, they have cumulatively sold stocks worth over ₹9,000 crore, according to data.
4. Tech view
Shrikant Chouhan, Head Equity Research, Kotak Securities, said that 24,000/77,000 zone (20-day SMA) and 24,200/77,600 will be the key trend-deciding levels for positional traders.
He said that a move below 24,200/77,600 could weaken sentiment, and traders should consider reducing long positions in such a scenario. “Our strategy would be to lighten weak long positions in the 24,400-24,500 zone, while a decisive close above 24,600 would reinforce the positive medium-term outlook,” he advised.
Disclaimer: Views and outlook shared belong to the respective brokerages/analysts and are not endorsed by Business Standard. Readers’ discretion is advised.
