Market Woes Continue: When Will the Sensex, Which Has Dropped 5000 Points, Recover?

Sensex Drops 5000 Points Amid Market Decline: When Will the Recovery Begin?

The Indian stock market, which has been among the worst hit in the global markets, continues to be in a daze this week. Recently the Strike rate of Sensex, the biggest index of Indian stock market touched five thousand point slip and the investor community is now involved when the graph will be up taken? The Sensex fell yet again on Wednesday, October 16, by 319 points or 0.39% to 81,501.36. On the other, Nifty 50, the other index of importance went down by 86 points or 0.34% and closed at 24,971.30.

This negative pessimistic trend is seen to be more driven by subdued global signals, lower corporate earnings for the September quarter, and inflation worries. Big cap stocks such as Infosys, Mahindra and Mahindra, ICICI Bank, ITC, Kotak Mahindra Bank, among others, were worst affected. These blue chip stocks were the largest deterrents in the Sensex.

The broader market also did not do much better, with the BSE Smallcap index up only 0.31 per cent, though the market capitalisation was affected. These investors lost around one lakh crore one day and total market capitalisation reached nearly ₹ 463 lakh crore. Even so, 262 stocks including HCL Tech, HDFC AMC and Siemens reached their fresh one-year high intra-day high amidst the worse ever scenario.

In terms of sectors, it was hardly much better, too: The Auto and IT sectors were the biggest losers to decline over 1% each. Nifty Pharma, FMCG and Media also fell as bearish sentiments prevailed in all the segments. Bank Nifty which was holding quite nicely in last couple of months slipped 0.20% while PSU Bank index trimmed losses and closed flat avoiding further downside.

What are the Factors Behind this Market Deterioration?

lt; Critics regard the travails of the market to the low investor confidence arising from effects such as poor earnings by corporate firms and high valuations. Another significant reason to believe the market's poor performance is the outflow of foreign capital. Highly unappealing demand during the second quarter coupled with spiky input prices has forced analysts to downgrade the earnings estimates for FY25, denting investors' confidence further.

According to Vinod Nair, Head of Research at Geojit Financial Services, the market is still in the range-bound trading mode where investors shy away from future earnings growth. It has also, as mentioned earlier, become a fear of being downgraded on earnings expectations, which has led the traders to act cautiously, with most of the buying seen in sectors like banking, IT, and auto, where profit-taking seemed to be dominant.

Future Outlook:
According to technical analysts such as LKP Securities' Rupak De, there may be more weakness in Nifty for the short term if the index breaks below a couple of key support levels. So far, 24,900 is the most crucial support level breached at a couple of places; any breach can take the index down to 24,700. However, a breakout on the upside from 25,000 may be an omen of a rally and thus a glimmer of hope for a market rebound.

The coming weeks will have investors keeping a close eye on global developments, corporate earnings, and inflation data for cues on where the market might turn around and reverse its downtrend. Until then, traders and investors alike are likely to be singing from the 'caution' hymnbook.

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