On Wednesday 02/08/2023, the benchmark stock market indices opened lower, influenced by weak economic data from the United States, Eurozone, and China, which affected risk sentiment globally.
The Sensex and Nifty, two key benchmark stock market indices in India, experienced a plunge in their values due to weak global cues, which made investors nervous. When global markets perform poorly or show signs of uncertainty, it often leads to risk aversion among investors, causing them to sell off their holdings and withdraw from the market.
Such nervousness and uncertainty can trigger a downward spiral in the stock market, leading to a significant decline in the values of the Sensex and Nifty. Investors may adopt a cautious approach and refrain from making new investments until they perceive a more stable and favorable market environment.
Factors contributing to weak global cues could include economic data releases, geopolitical tensions, changes in central bank policies, or global market trends. The situation may prompt investors to closely monitor the developments and react accordingly to protect their investments.
As of 9:15 am, the Nifty 50 index was down 0.43 percent at 19,649.75, and the S&P BSE Sensex fell 0.42 percent to 66,171.85. The broader market indices also experienced a sharp decline, despite performing well in recent sessions. Early trade saw a significant increase in volatility.
All sectoral indices, except Nifty Media, were in negative territory, with Nifty Metal falling over 1 percent.
Among the Nifty 50, the top five gainers were Coal India, Maruti, Power Grid, Adani Ports, and ONGC. On the other hand, the top losers were Tata Steel, Divi’s Laboratories, Tata Consumer Products, Hindalco, and L&T Infotech.
According to Om Mehra, a research analyst at Choice, the negative trend in domestic indices was driven by the global market performance. US market indices ended on a lower note due to a mixed batch of results reports.
In terms of technical analysis, the Nifty has crucial support around 19,650, as it is forming higher lows in hourly charts. Option writing data shows a dominance of call writers, indicating a negative sentiment. The banking stocks may attract attention as they could influence the benchmark indices.