Dalal street: Indian equities extended their losing run at the opening bell on Wednesday as rising tensions in West Asia pushed Brent crude close to USD 100 a barrel. The pressure was visible across Dalal Street, with the BSE Sensex falling 456.78 points, or 0.60 per cent, to 75,120.80, while the NSE Nifty 50 slipped 119.65 points, or 0.51 per cent, to 23,515.45. Investors were also watching global cues, foreign fund flows and a booming IPO market that is pulling liquidity away from listed stocks.
At the time of reporting, Brent crude was up USD 1.40, or 1.43 per cent, at USD 99.32 per barrel. WTI crude gained USD 1.23, or 1.33 per cent, to USD 94.26. Gold also strengthened by USD 22.06, or 0.51 per cent, to USD 4,377.86. For Dalal Street, the combination of expensive crude and geopolitical uncertainty remains a major concern.
Dalal street faces crude, IPO liquidity pressure
V K Vijayakumar, Chief Investment Strategist at Geojit Investments Limited, said two major headwinds were affecting the market. “Two strong headwinds are impacting the market now. One, Brent crude around USD 100 amid escalating US-Iran tensions is weighing on the economy. Two, the booming IPO market is sucking liquidity out of the market, resulting in a sustained downtrend in the Nifty. Perhaps, the latter is impacting the market more than the former. The listing gains from IPOs, which have increased to about 22% since June, are driving investors- both retail and institutional- into the IPO market. This is understandable since Nifty return YTD is negative 9.5%,” said Vijayakumar.
The IPO rush is also affecting foreign investors. “Even FIIs who have sold equity for Rs 284000 crores through the exchanges so far this year have put in about Rs 36000 crores in IPOs so far this year. Everyone is riding the momentum in the IPO market. This frenzy has pushed up the IPO valuations, too,” Vijayakumar noted.
Dalal street weighs IPO valuations against FOMO
Vijayakumar said IPOs are attracting subscriptions regardless of valuations and advised investors to be more selective. Dalal Street participants, he said, should avoid blindly chasing the current momentum.
“There are good and reasonably-priced IPOs. Investors can apply for these. But instead of blindly applying for all IPOs driven by FOMO, investors can now accumulate fairly-valued stocks, particularly large-caps in growth sectors. Investing in these segments and waiting patiently will reward investors handsomely while many IPOs run the risk of going below the issue price. Discretionary is the better part of FOMO,” said Vijayakumar.
Dalal street watches 23,500 support zone
Rajesh Palviya, Head of Research at Axis Direct, said technical signals remained cautious after the benchmark index ended the previous session at multi-month lows. “Persistent concerns over elevated crude prices and escalating Middle East tensions continued to weigh on risk appetite. Global cues also remained cautious… as investors balanced geopolitical risks against upcoming US inflation data,” Palviya said.
US market futures were also weak. Dow Jones Futures traded 30.19 points lower, or 0.06 per cent, at 52,755.88. The S&P 500 fell 45.08 points, or 0.58 per cent, to 7,673.52, while the Nasdaq declined 85.58 points, or 0.32 per cent, to 26,421.41.
For Dalal Street, Palviya identified 23,500–23,450 as immediate support, followed by 23,300, while 23,800–23,850 is the first resistance zone. “A decisive reclaim of 24,000 would provide meaningful relief and improve sentiment.” He added that Dalal Street will remain closely tied to crude prices and developments in West Asia, with moderation on either front potentially helping equities stabilise and recover.