According to experts, there may be further decline in the stock market in the month of August.
Do not look at the dense black clouds spread in the sky in the month of July. If you want to feel, then do what a storm can come in the month of August. It is very important for those investors who invest in their deposit capital stock market. Those who are sitting in this place whether there is an increase in the office or not, but the stock market will definitely double their capital or three times. But in the month of July, the stock market has only harmed investors. Whereas historically, from 2011 to 2020, only the year 2019 was such a year when the stock market was submerged in the month of July.
Even after that, even in the years after that, the stock market has given positive returns to investors in the month of July. Despite all these things, the danger has not yet been postponed. The picture is still left. Stock market analysts say that the stock market may see havoc in the month of August, which is expected to be bigger than in July. There are many reasons behind this. Let us also tell you what kind of destruction can be seen in the stock market. Before that, they also assume the month of July.
How much stock market drowned in July?
If we talk for the month of July, then the stock market has seen a decline of more than 3 percent. The Bombay Stock Exchange’s major index Sensex closed on June 30 at 83,606.46 points. While the last business Sensex of July came to the lower level with 80,695.15 points. This is the most lower level of the Sensex after June 13. This means that in about a month, the Sensex has seen a decline of 2,911.31 points i.e. about 3.50 percent.
On the other hand, the major index of the National Stock Exchange has also seen a big decline in the Nifty. The Nifty was seen at 25,517.05 points on the last trading day of June. Which has come to 24,635 points on the last business day of Julai. This means that since then, the Nifty has seen 882.05 points, or 3.45 percent.
The special thing is that investors have also suffered a big loss in the month of July. Looking at the data, on June 30, the market cap of BSE was Rs 4,61,672.35 crore. Which came to Rs 4,46,723.89 crore during the trading session on 31 July. This means that investors have lost Rs 14,29,948.46 crore so far in the month of July.
There may be further decline in August, why?
According to experts, the Nifty is falling below its support level, due to which the process of four months gain is dramatically broken. The main reason for this is also. Foreign institutional investors (FIIs) have sold a huge selling of Rs 25,000 crore in only eight business days. This is the reason why more losses are likely in the month of August. According to experts, Trump can also cause more 25 percent tariffs on Indian goods and disappointing income sessions of the first quarter can also cause heavy destruction. In the last 10 years, there has been a decline four times in the month of August.
Although the average return is at a minor 1 per cent, the brutal reality of sharp decline is coming out due to many adverse conditions. FII has sold shares worth about Rs 25,000 crore for all the previous 8 sessions. Brent crude oil prices have also increased by 7 per cent to $ 72-73 per barrel in the last one week and the biggest one-day decline in the Indian rupee on Wednesday and it reached 87.5125, the lowest level of five months.
Returns likely zero in August
Strategic Anand James, Chief Market of Geojit Investments Limited, warned in the media report that on the basis of analysis of the last 10 years, the possibility of positive returns in August is completely zero in view of the negative returns of July, which shows that the current weakness may continue till next month.
Technical indicators are shining in red mark at all levels. Strong support levels are now around 24,450–23,600, and the simple 200-days simple moving average is located at 24,061. The health of the broad market is deteriorating rapidly and only 53 per cent shares of Nifty 500 are trading above their 200-days SMA.
James said that this percentage is the lowest since the mid of June, when the Nifty recovered from the same level, making the 24,650 level of a significant decline. He identified the decisive level that can decide whether the markets will come in their position or go down further under correction.
Reduction in corporate income
In media reports, Equity Research Head Srikanth Chauhan in Kotak Securities throws light on the dual threats on the senses. The market direction in August will mainly depend on two major factors. Development and income performance of Nifty 50 companies on the tariff front. The corporate income season has been seen to be very bad. Sprinkling salt on the wound, the Indian rupee continues to fall continuously against the dollar, while the bond yield remains stable around 4.40 per cent, the combination is providing very little relief to already panicked foreign investors. Chauhan warned that due to lack of domestic liquidity support, weakness can be seen in the market. He expressed the possibility of trading in a limited range between 24,500 and 25,500, until no decisive breakout trigges trending action.
FIIs also remain headaches
The migration of FII is much higher than earning temporary profits only. Due to uncertainty over a potential American tariff on Indian exports and weakening of the first quarter results, institutional investment is moving towards secure investments, making domestic markets sensitive to further selling pressure.
The decision of US President Donald Trump to impose 25 percent tariff on India may affect the FII flow. Nuwama said that this is likely to have a direct impact on shares/sectors where the US determines a marginal price – such as pharma, auto subsidiary companies, some industrial areas, cables and wires, tiles etc.
Nuwama said that the indirect effect of capital migration is likely to be more effective and it could affect small and medium -sized domestic cyclical areas (real estate, NBFCs and industrial areas). On the other hand, the decline in the rupee can help the IT sector and it can potentially perform better, given the current low valuation. Overall, we are cautious towards markets.