share market
There was a big fall in the stock market during the trading session on Tuesday. Around 2 pm, Sensex saw a fall of 722 points. A big decline has also been seen in Nifty. Due to which stock market investors suffered a loss of Rs 5.41 lakh crore. If we talk about the main reasons for the decline in the stock market, there was a huge fall in Kospi and huge selling in technology shares. If we talk about shares, then the biggest losers on BSE included Infosys, TCS, Tata Steel, Tech Mahindra and Adani Ports, which fell by up to 3.5 percent in afternoon trading. Let us also tell you what kind of figures were seen in the stock market…
Big fall in stock market
Bombay Stock Exchange’s main index Sensex is trading at 76,547.30 points with a decline of 546.77 points at 2:20 pm. Whereas during the trading session, Sensex fell by 722 points and came to the lower level of the day at 76,371.70 points. However, the Sensex opened at flat level with 77,086.05 points. On the other hand, the main index of National Stock Exchange was trading at 23,909.45 points with a fall of 200 points at 2:20 pm. Whereas during the trading session, Nifty fell by 240 points to 23,862.65 points. However, Nifty opened at 24,071.30 points.
Main reasons for market decline
Kospi falls
After recently reaching a record high, heavy selling was seen in South Korea’s benchmark Kospi index on Tuesday. Investors booked profits in big companies of the semiconductor sector amid concerns of excessive valuations after the tremendous rally in the market. The Kospi fell as much as 10%, with SK Hynix falling more than 12% and Samsung Electronics falling nearly 13%. The Korea Exchange halted trading for 20 minutes after a market-wide circuit breaker was triggered.
The fall comes after the index hit a new all-time high earlier this month and crossed the 9,000 level for the first time. After the fall in the shares of American tech companies in Monday’s session, the mood of investors regarding technology stocks further weakened, and now the attention of investors is on the quarterly results of Micron Technology coming this week.
Fear of US Federal Reserve raising interest rates
Due to the ongoing conflict in the Middle East, oil prices have increased, due to which concerns about inflation have increased again. This has also strengthened the expectation that interest rates may remain high. According to the CME FedWatch tool, traders now consider the probability of the Federal Reserve raising interest rates in December at 88%, compared to 61% before the Fed meeting last week.
Due to increase in interest rates in the US, foreign money may move out of the Indian capital market, because higher yields (returns) on US Treasuries are attractive for foreign investors. The increase in bond yields in the US also reduces the attractiveness of Indian bonds for foreign investors.
Selling in IT shares again
There was some relief on Monday after the huge selloff last week, but on Tuesday IT shares came under pressure again. Shares of TCS, Infosys, Wipro and HCLTech fell by at least 3% amid concerns about changes coming due to AI and reduction in spending on technology.
This new round of selling started when Accenture reduced the upper end of its annual revenue growth guidance. This again raised concerns about reduction in ‘discretionary spending’ (non-essential expenses) by global companies. Although investment in areas such as artificial intelligence and cyber security remains strong, companies are avoiding spending on large IT consulting and digital transformation projects.
Accenture’s statement has further increased investors’ concerns that the recovery in demand may take longer than expected. This outlook is particularly important for Indian IT companies, as they earn most of their revenues from North America and often compete with Accenture for large digital transformation contracts.
fall in rupee
Traders are avoiding long-term investments in the South Asian currency (rupee) due to the fall in Asian stocks and rising expectations of the Federal Reserve raising interest rates this year. Due to this, the Indian Rupee fell by 0.16 percent to 94.8275 against the US Dollar. Enrich Money CEO Ponmudi R said that immediate resistance for the Rupee is visible in the range of 94.70-94.75. If it remains above this level, the currency may further weaken to 94.80-94.85 against the US dollar.
On the other hand, if it goes below 94.50, it could open the way for a move towards 94.20-94.30 zone. This zone has previously served as an important long-term support level and has not yet been retested. The outlook for the near future remains cautious as the rupee is trading near important technical levels. Geopolitical developments, dollar demand and domestic policy factors can decide its direction.
profit booking
Nifty has closed with gains in six out of the last eight trading sessions. The reason for this has been the reduction in geopolitical tension after the progress on the US-Iran peace agreement and the resulting decline in crude oil prices. However, caution remains among those involved in the market. Despite the recent decline in oil prices, fully restoring shipping through the Strait of Hormuz could be a gradual and complex process, analysts say. This will require agreements on coordinated movement of ships, restarting of oil production facilities, repair of infrastructure and de-mining operations. Additionally, some shipowners are hesitant to fully resume operations in the strait and the broader Persian Gulf region. Experts also say that during the long blockage in the Hormuz shipping route, global oil reserves had decreased and it may take time to replenish it.
