Sensex Down 494 Points, Nifty at 24,749; Tomorrow Nifty Prediction
Tomorrow Nifty Prediction
Markets Close on Decline for Third Consecutive Day: What to Expect on October 18
The Indian stock markets faced a challenging session on October 17, with both the Nifty and Sensex indices declining for the third consecutive day.
The downward pressure was largely attributed to selling by foreign institutional investors (FIIs) and a significant drop in automobile stocks, particularly ahead of the last day for subscription to Hyundai’s IPO.
This environment has raised concerns about the market’s stability and future direction.
By the end of trading, the Nifty index settled at approximately 24,749.80, reflecting a decline of 221.50 points or 0.89%.
The Sensex closed at 81,006.61, down 494.75 points or 0.61%. Market breadth was negative, with 1,199 stocks advancing compared to 2,580 declining, while 101 remained unchanged. Notable losers in the Nifty included Bajaj Auto, Shriram Finance, Hero MotoCorp, Nestle, and Mahindra & Mahindra (M&M).
In contrast, the top gainers were Tech Mahindra, Infosys, L&T, Power Grid Corporation, and State Bank of India (SBI).
Sectoral performance was mixed but largely negative, with the IT index showing a modest gain of 1%. Other sectors, particularly automobiles, media, and realty, experienced declines between 2-3%.
The BSE midcap and smallcap indices also fell by over 1%, indicating a broader market weakness.
Factors Influencing Market Sentiment:
Several factors contributed to the negative market sentiment. The ongoing selling by foreign funds created an atmosphere of caution among domestic investors.
Moreover, the sharp decline in automobile stocks was particularly alarming, given that these stocks are often seen as indicators of consumer demand and overall economic health.
The anticipation surrounding Hyundai’s IPO added another layer of complexity, as investors adjusted their portfolios in response to this upcoming event.
In addition to external factors, concerns over high valuations in various sectors are weighing heavily on market participants.
The Indian market has seen significant upward movement over the past year, and many investors are now reassessing their positions in light of potential corrections.
This profit-booking activity has been evident in sectors such as banking, real estate, metals, and telecommunications.
Market Prediction for October 18:
As investors brace for October 18, market analysts are offering varied insights on potential movements. Rupak Dey of LKP Securities believes that the Nifty has found initial support in the 24,700-24,750 zone.
He notes that the Nifty has broken below a bearish flag pattern on the daily chart, suggesting a potential for continued declines in the near term.
The RSI (Relative Strength Index) is also indicating a bearish crossover, adding to the sense of caution.
Despite the current bearish sentiment, Dey cautions against initiating short positions at this juncture. The index is approaching a critical double-bottom support level, which could act as a springboard for a potential recovery.
Dey suggests that a bounce back towards the 25,000 mark could be plausible in the short term, but warns that a drop below 24,700 could trigger a more significant correction, leading to increased volatility in the market.
VK Vijaykumar from Geojit Financial Services provides a slightly different perspective. He points out that, amid the backdrop of FII selling and domestic institutional investor (DII) buying, the Nifty is likely to continue its consolidation around the 25,000 level.
While the ongoing liquidity in smallcap stocks has been a source of strength, Vijaykumar expresses concern about the sustainability of this trend.
As the second-quarter earnings reports begin to roll in, he anticipates stock-specific actions, particularly in sectors like IT, where investors may look for buying opportunities on dips.
Prashant Tapase of Mehta Equities shares similar concerns regarding the market’s direction. He emphasizes that, despite strong signals from US and European markets, Indian equities continue to decline.
The pain from expensive valuations remains a dominant theme, leading to profit booking in various sectors.
He observes that the sharp fall in automobile stocks, particularly in anticipation of the Hyundai IPO, has further dampened market sentiment.
Sectoral Analysis:
Looking deeper into sectoral performance, the automobile industry has been under considerable pressure. Major players like Bajaj Auto and Hero MotoCorp saw significant declines, raising questions about consumer demand and supply chain disruptions.
The broader implications of this downturn could impact not only the auto sector but also related industries such as metals and manufacturing.
The IT sector, while it showed resilience on October 17, is also facing scrutiny as companies prepare to release their quarterly earnings.
Analysts expect mixed results, and any negative surprises could lead to increased volatility. Conversely, some investors view dips in IT stocks as potential buying opportunities, given the sector’s long-term growth prospects.
In the banking sector, rising interest rates and regulatory changes are contributing to a cautious outlook. Investors are closely watching for any updates on government policies that may impact lending rates and credit growth.
Final Remarks:
As the markets head into October 18, the atmosphere remains charged with uncertainty. Investors are advised to remain vigilant, keeping an eye on both global cues and domestic developments.
The interplay between FII selling and DII buying will be crucial in determining market direction. Analysts recommend a focus on stock-specific movements and caution against broad market bets in the current environment.
In summary, while the recent decline raises concerns, the potential for recovery exists, particularly if the Nifty holds its support levels.
With upcoming earnings reports and external economic indicators on the horizon, the market’s next moves will be closely monitored by investors and analysts alike.
Staying informed and adaptable will be key strategies for navigating this fluctuating landscape.
