Indian Stock Market Faces Decline Today: Experts Attribute It to Two Key Factors

In today’s trading session, the Indian stock market witnessed a continuation of Monday’s late sell-off, with key benchmark indices experiencing further downward movement. The Nifty 50 index opened marginally higher at 21,751 levels but quickly succumbed to selling pressure, touching an intraday low of 21,555 points and recording an intraday loss of approximately 186 points on Tuesday.

The Sensex commenced the day higher at 72,332 and reached an intraday low of 71,613 levels, marking a loss of over 650 points during Tuesday’s trading. Similarly, the Nifty Bank index started at 48,194 levels and hit an intraday low of 47,814 within the early hours of the market opening.

Reasons for the Decline:

According to experts in the stock market, the downward trend in the Indian stock market today can be attributed to two main factors. Firstly, the market is experiencing a correction due to the overbought condition of key benchmark indices. Secondly, the upcoming Q3FY24 results season is prompting investors to rebalance their portfolios, leading to profit booking.

Sandeep Pandey, Founder at Basav Capital, highlighted the overbought condition of the Indian stock market, stating, “In the last two months, Nifty 50 index has surged nearly 3,000 points, BSE Sensex has witnessed an increase of around 9,400 points, and Nifty Bank index has climbed approximately 6,350 points. This continuous rise has led to an overbought condition. Hence, the ongoing correction is viewed as a healthy correction, with profit booking overdue from both DIIs and FIIs.”

Saurabh Jain, Vice President — Research at SMC Global Securities, emphasized the expected profit booking ahead of the Q3 results season. He stated, “Profit booking was overdue as FIIs and DIIs remained net buyers in the last two months. This profit booking was widely expected as well because the Q3 results season is about to begin, and the Indian market typically undergoes rebalancing ahead of the Q3 results season at the beginning of the new year. Therefore, this is seen as a natural profit-booking and rebalancing of the market in preparation for the upcoming results season.”

Stock Recommendations:

For investors eyeing opportunities during this period, Saurabh Jain suggested looking at stocks in the capital goods, infrastructure, hotels, and FMCG segments.

Sandeep Pandey advised bottom fishers to consider flagship large-cap stocks, emphasizing, “In the recent rally, mid-cap and small-cap stocks have seen significant gains, while flagship large-cap stocks are yet to fully participate in this bullish trend. I would recommend bottom fishers to explore Nifty 50 stocks like Tata Consumers, ITC, JSW Steel, and Wipro.”

Additionally, Pandey mentioned Coal India as a potential option, even though it is not listed on the Nifty.