Image Credit source: Google Gemini
There was a huge decline in the Indian stock market on Wednesday. Both Sensex and Nifty fell by about 1 per cent in the morning session even as Trump announced to extend his April 22 ceasefire deadline for the Iran war. This decline occurred because falling rupee, rising oil prices and other factors left investors confused. The Sensex fell by more than 800 points and fell below the 78,500 level, while the Nifty 50 fell by more than 200 points and slipped below the 24,400 level. The benchmark indices are on the verge of breaking the trend of growth that has been going on for three consecutive sessions.
Which stocks are falling and which are rising?
HCL Tech shares were the biggest loser in Sensex. Shares of the company fell sharply by about 5 per cent after investors were disappointed with the fourth quarter results. Other IT stocks like Tech Mahindra, Infosys and TCS also fell by 2-5 per cent. Bucking the trend, Hindustan Unilever and NTPC shares gained about 2 per cent each, and were among the top gainers in the benchmark index.
Broader markets outperformed the benchmark indices. Nifty Midcap 100 and Nifty Smallcap 100 indices remained in the green and registered slight gains. At the sectoral level, Nifty IT fell by almost 4 per cent and was the biggest loser sector. Contrary to this trend, Nifty FMCG registered a gain of about 1 percent. About 1,407 shares declined on NSE, while 1,561 shares advanced and there was no change in 101 shares.
What are the experts saying?
VK Vijayakumar, Chief Investment Strategist, Geojit Investments, said that this period of the market is very volatile and uncertain, but it proves how important it is to remain invested. So far this month, Nifty has registered a gain of 10 percent. Broader markets have outperformed the benchmark indices, with the BSE 500 returning around 15 per cent. This clearly shows the potential that the market has for sudden, shocking changes. This sudden rise in the market may be due to technical factors like ‘short covering’. Yesterday, even when the activities of institutional investors were slow, there was a rise in the market, which proves this point.
Who is performing better?
The analyst said that President Trump’s announcement of an indefinite ceasefire and Iran’s indifferent and suspicious response to it mean that this period of uncertainty will continue. He further said that anything can happen at any time. In the meantime, investors can pay attention to important market trends. This segment is getting support from the good results of the financial sector. Due to good results, stocks related to capital market are performing well. Stocks related to power sector are also doing well. After yesterday’s weak commentary from HCL Tech, the IT sector is likely to go into correction mode again. Keep an eye on the results of auto and auto ancillary companies, which are expected to be good.
There was a decline in the stock market due to these 7 reasons
Market mood delicate due to Iran-America war
US President Donald Trump said he would extend the ceasefire with Iran indefinitely so that further peace talks can take place. In a post on ‘Truth Social’, Trump said his administration had agreed, at the request of Pakistani mediators, to “hold off on striking Iran” “until their leaders and representatives come up with a common resolution … and complete discussions, regardless of their outcome.”
However, what spooked investors was that Trump announced that he would continue the US Navy blockade of Iran’s seaborne trade, which Iran considers an act of war. It is noteworthy that this is not the first time that Trump has made strong threats and backed out at the last moment.
Iran’s reactions to the ceasefire extension have ranged from cautious to dismissive. Tasnim News Agency, affiliated with the Islamic Revolutionary Guard Corps, has rejected Trump’s claims and warned of strongly opposing American actions. Iran demands an end to America’s pressure tactics. Apart from this, US Vice President JD Vance has postponed his visit to Pakistan for peace talks.
Oil prices near $100
Oil prices rose sharply overnight, and continued to rise on Wednesday morning. Brent crude futures were trading around $98.57 per barrel, while WTI crude was hovering around $89.59 per barrel. It is noteworthy that this happened when Brent crude remained at the level of $ 95 per barrel due to rising expectations of peace talks in the last few sessions, which provided support to ‘bull’ (bullish) investors on Dalal Street.
However, oil prices still remain below the critical level of $100 per barrel. They crossed this level for the first time in March, which was the first time since Russia invaded Ukraine in 2022. This happened after the ‘Strait of Hormuz’ was effectively closed. Oil prices are likely to be further affected by continued naval blockade by the US.
Rupee slipped again
The rupee is becoming weaker against the US dollar. In early trade, the Indian currency fell by 24 paise to 93.68 against the US dollar. It came as the dollar strengthened as Trump extended the ceasefire indefinitely, sending the price of the safe-haven currency to its highest level in a week. The special thing is that the rupee is declining against the dollar for the third consecutive day.
FII selling
According to preliminary data available on NSE, foreign investors sold Indian shares worth Rs 1,918.99 crore on Tuesday. This came as FIIs remained net buyers of Indian stocks for four consecutive sessions, although this pales in comparison to the massive selloff that took place in March following the war in the Middle East.
Profit booking by investors
Indian benchmark indices are about to break their three-session growth streak. Till Tuesday, in three consecutive sessions, the Sensex had gained about 1,300 points (1.6%) and the Nifty had gained about 380 points (1.6%). Due to the huge gains in these three sessions, the total market capitalization of all the companies listed on BSE increased by more than Rs 8 lakh crore.
Fall in IT shares
The steep fall in IT stocks also contributed to the steep fall in the benchmark index. HCL Tech shares fell 5 percent as the company’s Q4 results did not meet expectations. The net profit of this big IT company increased by 4.3 percent year-on-year (YoY) to Rs 4,488 crore, while the revenue increased by 12 percent to Rs 33,981 crore. The company failed to meet its revenue growth estimates, leading many brokerage firms to cut their target prices for the shares and downgrade their ratings. This weak sentiment also affected other big IT stocks, due to which there was a huge fall of 4 percent in Nifty IT index.
decline in foreign markets
Foreign markets mostly remained in the red as investors remained doubtful whether the peace talks being held in Pakistan would actually lead to a long-term agreement between Iran and the US. Hong Kong’s Hang Seng index fell by more than 1 percent. Japan’s Nikkei, South Korea’s Kospi and China’s Shanghai Composite were trading in the green with slight gains. Wall Street closed in the red yesterday, with both the S&P 500 and Nasdaq falling about 0.6%. European markets also fell yesterday, with both the UK’s FTSE and France’s CAC falling more than 1 per cent.
