Why Did the Stock Market Fall Today?
The Indian stock market witnessed a sharp decline on July 28, with Sensex and Nifty falling by 0.70% and 0.63% respectively. The benchmark equity indices fell due to heavy selling in Kotak Mahindra Bank, continued foreign fund outflows, and weak cues from Asian markets.
Kotak Mahindra Bank: A Major Laggard
Shares of Kotak Mahindra Bank plunged nearly 7% after the bank reported a consolidated net profit of Rs 4,472 crore for the June quarter, compared to Rs 7,448 crore in the same quarter last year. The bank flagged stress in its retail commercial vehicle loan portfolio, citing unfavourable macroeconomic conditions.
Foreign Institutional Investors Offload Equities
Foreign Institutional Investors (FIIs) sold equities worth Rs 1,979.96 crore on Friday. According to VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services, FIIs offloaded Rs 13,552 crore from the cash market in the previous week alone, adding significant pressure on the domestic markets.
Asian Markets: A Negative Influence
Asian equity markets were largely negative on Monday. Indices like South Korea’s Kospi, Japan’s Nikkei 225, and China’s Shanghai Composite were trading lower, which weighed on investor sentiment in Indian markets.
Rising Crude Prices: A Concern
The global oil benchmark Brent crude edged higher by 0.29% to USD 68.64 per barrel. Rising crude prices tend to increase input costs and stoke inflationary pressure in oil-importing countries like India, contributing to negative market sentiment.
IT Stocks: A Drag on the Market
IT stocks also came under pressure. The Nifty IT index witnessed losses led by Wipro, TCS, HCL Tech, and Tech Mahindra. Vijayakumar noted that continued weakness in the IT pack is dragging broader markets.
India VIX: A Measure of Market Volatility
The India VIX, a measure of market volatility, rose by nearly 7% to 12.07, signaling growing nervousness among traders. A rising VIX often corresponds with heightened fear and can lead to increased selling pressure in the market.
Market Outlook
According to Anand James, Chief Market Strategist at Geojit Financial Services, Nifty may find immediate support at 24,450 and further at 24,000. He indicated that the index could face near-term downside risk. However, if Nifty crosses above 24,922, it may trigger short-covering, potentially pushing the index to test levels around 25,324. That said, resistance around the 25,000 mark may still pose a challenge for the bulls.
Disclaimer
The views and investment tips by experts in this report are their own and not those of the website or its management. Users are advised to check with certified experts before taking any investment decisions.
