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Home / india / sensex today: Sensex tanks 500 pts, Nifty below 11,450; 5 key factors behind market pain

sensex today: Sensex tanks 500 pts, Nifty below 11,450; 5 key factors behind market pain

NEW DELHI: Political uncertainty in the US, across-the-board selling and signal of an Asia wide slowdown from the Asian Development Bank weighed on the domestic equity market on Wednesday.

The 30-share pack Sensex tumbled over 500 points to trade close to the 38,560 mark while NSE Nifty fell nearly 150 points and breached the 11,450 mark.

The broader market followed the headline indices, with Nifty Midcap and Smallcap indices dropping 1 per cent each. All sectoral indices, barring IT, traded in the red on NSE, led by Nifty Auto (down 3.84 per cent) and Nifty Realty down (down 3.1 per cent). Biggest Nifty losers were SBI and Tata Motors, each of which was down about 4 per cent.

Here are the top factors affecting the market mood:

US political worries
A brewing political turmoil in the US affected the equity markets across the globe, and India was no exception. US lawmakers launched a formal impeachment inquiry into President Donald Trump, accusing him of seeking foreign help to smear Democratic rival Joe Biden ahead of next year's presidential election. Trump termed the inquiry a 'Presidential Harassment' in a tweet on Tuesday. MSCI’s broadest index of Asia-Pacific shares outside Japan was down 0.82 per cent.

Profit booking
Traders booked profits after a massive two-day rally that gave Sensex a 3,000-point lift in just two sessions. Nifty jumped about 900 points within a short period. Experts advised caution at higher levels. "Stocks traded near peak valuations and sustainability at this level is essential. Investors need to closely monitor market movement in the coming sessions, as volatility would remain high, "said Ajit Mishra, Vice President, Research, Religare Broking.

Fading trade war optimism
Hopes of a trade deal between the US and China faded after Trump criticized trade practices of Asian economic giant. Trump on Tuesday said he would not accept a 'bad deal' in the trade negotiations, and that Beijing had failed to keep the promises that it had made when China joined the World Trade Organization. China's top diplomat hit back at US criticism of its trade and development model, saying Beijing had no intention to "play the Game of Thrones on the world stage" but warned Washington to respect its sovereignty, including in Hong Kong, Reuters reported.

Slowdown buzz from ADB
Asian Development Bank sounded the slowdown bugle in Asia, blaming the US-China trade war. "The People’s Republic of China – US trade conflict could well persist into 2020, while major global economies may struggle even more than we currently anticipate," Yasuyuki Sawada, ADB’s chief economist, said in a statement. ADB sharply cut its growth estimate for India to 6.5 per cent from 7 per cent. ADB, however, maintained India’s 7.2 per cent growth projection for next year.

Indecisive technicals
On Tuesday, Nifty formed an indecisive Doji on the daily chart, which suggested traders were a bit uncertain at higher levels. "There is a possibility of choppy movements, with minor weakness in Nifty over the next couple of sessions," said Nagaraj Shetti, Technical Analyst at HDFC Securities. The bullish gap zone at 11,471-11,381, registered on September 23, may remain a critical support in the near term, as any breach of this level on a closing basis might trigger a short-term downswing, said Mazhar Mohammad, Chief Strategist at Chartviewindia .in.

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