Sensex tumbles over 600 points: Factor’s behind weakness on D-Street

Benchmark stock market indices encountered a sharp decline on Wednesday, with the BSE Sensex falling over 600 points and the Nifty50 retreating to 22,700 levels.

At 11:20 am, the BSE Sensex had dropped 602.14 points to 74,568.31, while the NSE Nifty50 was down 176.50 points, trading at 22,711.65.

The sell-off was widespread, affecting all sectors, with heavyweights such as HDFC Bank, M&M, ICICI Bank, L&T, Reliance, and Axis Bank among the top losers.

Sectoral indices also faced declines, with Nifty Financial Services down 0.6% and Nifty Auto declining 0.8%. Other sectors, including FMCG, IT, Healthcare, Pharma, and Oil & Gas, also saw reductions.

It may be noted that this marked the fourth consecutive session of losses for Dalal Street, as investor anxiety increased ahead of crucial US inflation data expected later this week.

The data is anticipated to provide clues about the Federal Reserve's future interest rate decisions.

Analysts also noted that volatility remains at a two-year high due to investor anxiety regarding exit polls for the Lok Sabha elections and GDP data, scheduled to be released on May 31.

Prashanth Tapse, Senior VP (Research) at Mehta Equities, noted that despite positive catalysts like record highs in the Nasdaq Composite driven by tech stocks, caution is warranted due to the India VIX reaching a two-year high ahead of significant events like exit polls and GDP data.

“Caution is advised as India VIX is at a two-year high of 24.20, ahead of significant events such as exit polls and GDP data,” Tapse said.

Deven Mehata, Research Analyst at Choice Broking, highlighted that Nifty could find support at 22,800, with immediate resistance levels at 22,950 and 23,000.

“Yesterday, Indian markets traded flat during the day, then fell in the last hour and finished near the day's low. Traders with long positions should set a strict stop loss at 22800 on a closing basis,” he added.