This week, investors in the Indian stock market faced significant losses as major indices tumbled. The Sensex dropped by over 4,000 points, closing at 78,041, down from 82,133. The Nifty-50 also witnessed a sharp decline, falling from 24,768 to 23,587. Similarly, the Nifty Bank Index plummeted by 2,824 points, from 53,583 to 50,759. The major benchmark indices lost the gains they had accumulated over the past four weeks, as global factors, including the US Federal Reserve’s stance on interest rates and Foreign Institutional Investors’ (FII) selling, led to this sharp market correction.
Why is the Market Declining? Experts attribute the market’s fall to the Federal Reserve’s hawkish stance on interest rate cuts in 2025, which has spooked global markets. The US dollar surged to a two-year high following these signals, causing increased buying in the bond and currency markets. This led to FII selling in the Indian markets. Domestic Institutional Investors (DIIs) have been hesitant to step in and buy at lower levels due to weak earnings reports and the ongoing uncertainty about market recovery.
Why Are DIIs Hesitant to Buy at Lower Levels? According to stock market expert Dr. Ravi Singh, global markets weakened after the Federal Reserve’s signals, strengthening the US dollar. This led to fresh buying in the bond and currency markets, which exacerbated FII selling. In addition, after a weak earnings season, DIIs remain cautious and are waiting for further clarity, especially with the 2025 Budget approaching. As a result, they have refrained from bottom-fishing (buying at lower levels) in the current market scenario.
Will the Decline Continue? The Nifty-50 index closed below the important 200-period moving average at 23,800, signaling a potential bearish trend. The next support level for the index is around the 23,500 mark. If this level is breached, the overall trend may turn more bearish. Similarly, the Bank Nifty index is approaching its key 200-period moving average at 50,000, and if this level is broken, the trend could weaken further. The next major support for Bank Nifty is at 49,800, and if that is breached, selling pressure could intensify.
What to Expect on Monday? Dr. Ravi Singh predicts that Monday could see heightened volatility in the Indian stock market. As the Nifty has slipped below the key 200-day SMA (simple moving average), the next potential support levels are seen at 23,200 to 23,100. If these levels break, the index could slide further toward 22,800. On the upside, the resistance is expected to be in the range of 23,800 to 24,000, with a further resistance at 24,150 to 24,300.
Investors should stay cautious and closely monitor the market’s movements as the week unfolds, especially with global factors influencing the Indian market’s direction.
