Key Takeaways:
- Nifty and Sensex indices encountered heavy selling after holding strong for a few weeks straight.
- Foreign Institutional Investors are the primary cause of sell-offs. Tech stocks are sold everywhere, and the Nifty is sensitive to tech sectors.
- The Nifty was holding steady between 50-day and 100-day MAs until last week. Sellers came in, and the indices fell below the 100-day MA.
WISCONSIN (CoinChapter.com) — India’s Nifty and Sensex indices crashed to end last week’s trading, while the US S&P 500 Index climbed. What is that about?
The drops were not catastrophic, but it seemed out of place that Germany, Japan, and the US had strong stock markets, and India fell over 1% to close the trading week. Economists placed the reason more on global issues than anything happening within India.
Fears of a global recession, higher crude oil prices, and uncertainty about the US Federal Reserve’s decision regarding the next rate hike played a role in India’s markets.
Nifty fell over 132 points, while Sensex finished quite lower with a 450-point drop. Both indices have now started the new year off with a negative tone. IT stocks sold off and were banged up at the rate of -2%.
The Biggest Drag on the Market is FIIs
India’s biggest stock market hang-up is FIIs (Foreign Institutional Investors).
FIIs have been furiously selling lately. They sold for ten successive days, while the underperformers of 2022, China and Europe, are holding their heads above water for the time being. In India, FII money is going after cheaper valuations because markets are currently overvalued.
Technicals
For almost two weeks straight, the Nifty traded between 50-day and 100-day moving averages (MA). Then, seemingly out of nowhere, it closed below the 100-day MA to end last week.
Indian investors are nervous about high-interest rates slowing economic growth. Investors are closely watching US IT stocks fall, which does not rest well for the nation’s IT companies, which get a big part of their revenue from the US market.
For technical traders looking to buy, the 50% Fibonacci resistance is at 17,918.95. For sellers, the nearest Fibo is 38.2% at 17,690.35.
