Sensex and Nifty have hit a 5-month low and the fall will be sharper hereon

Sensex and Nifty have hit a 5-month low and the fall will be sharper hereon
The stock market index on a display screen at the Bombay Stock Exchange (BSE) building in Mumbai. After touching the 40,000-mark in morning trade, the BSE Sensex turned choppy after Finance Minster Nirmala Sitharaman rose to present her maiden Budget.Photo) (PTI7_5_2019_000223B)(
  • Benchmark stock indices have broken below the 200-day moving average.
  • This is a key level watched by traders and a breach may lead to faster fall in the market.
  • Sensex and Nifty have lost over 5.7% since this month as foreign investors pulled out money after the tax on super rich imposed in the latest budget.
Indian markets are firmly in a bear grip closing the day at a five-month low. Benchmark indices, Sensex and Nifty, have lost 5.7% since the start of the month and today (July 30), they broke below the average closing price over the last 200 days.

This is a key level watched by traders and when it is breached, it indicates a sharper fall ahead.

"The trajectory of the index shall remain downwards with an initial target of 11,100 and below that, a bigger target in the zone of 10,850–10,740 levels can't be ruled out going forward," Mazhar Mohammad, Chief Strategist – Technical Research & Trading Advisory, told Moneycontrol.

The Sensex ended the day down 289.13 points at 37,397.24, while Nifty was down 103.80 points at 11,085.40. All sectoral indices other than IT ended in the red.

IndexJuly 30
PSU Bank-4.90%


Over 500 stocks hit their lowest level in a year today, including some marquee names like Coffee Day Enterprises, Vodafone Idea, RBL Bank, Ashok Leyland, Bharat Forge, Godrej Consumer, Tata Steel, Tata Motors, Maruti Suzuki, and TVS Motor among others.

Mukesh Ambani-owned Reliance Industries, one of the top three stocks in India, has been a drag on the market. The stock has lost over 8% in the last six days wiping out billions in investor wealth.

A bunch of factors have pushed investors in India to pull out money. But none more than the recent budget, which imposed a tax on super rich, which automatically brought in nearly 40% of all foreign portfolio investors in India under a higher tax bracket. This has led to a sharp reaction from the foreign investors who have pulled out $2.5 billion from India in 3 weeks, according to an India Infoline (IIFL) report.

The tax on share buybacks did not go well with foreign investors and neither did the proposal to increase the free float-- shares publicly held for trading-- to 35% from the existing 25%. All of these proposals threatened to eat into the profits that foreign investors could have made.

A combination of erractic and uncertain monsoon, a fall in consumption, and a slowdown in corporate earnings have further eroded investor confidence. Global factors like the trade war between the US and China, the tensions in the middle east affecting oil prices as well as the fear of the monetary policy moves from the US Fed have also contributed to the fall in India.


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