The Indian stock market witnessed a sharp decline on Thursday, with both the Sensex and Nifty falling significantly. The Sensex dropped 1,062 points to close at 72,404 points, while the Nifty slipped 345 points to close at 21,957 points. The sell-off was seen across all major sectoral indices, with energy and metal sectors being the worst hit, losing nearly 3 per cent.
Analysts attributed the sharp decline in the stock market to a variety of factors, including a strong US dollar, uncertainty surrounding the Lok Sabha elections, and profit booking after a recent rally. Vinod Nair, Head of Research at Geojit Financial Services, highlighted the caution among investors due to uncertainties around Q4 earnings and the upcoming general elections. He also mentioned that global indices were trading with mixed cues, further adding to the volatility in the market.
In addition to these factors, continued selling by foreign portfolio investors (FPIs) and lower-than-expected earnings by some major corporations also weighed on investor sentiment. FPIs, who were net buyers until mid-April, have now turned into net sellers, with cumulative sales worth Rs 8,671 crore in the month of April and Rs 10,413 crore so far in May. This trend has contributed to an increase in the volatility index, indicating that market sentiment may persist, potentially leading to further declines in the Nifty.
As the market faces ongoing volatility, traders are advised to adjust their positions and prioritize stock selection. Ajit Mishra, SVP of Research at Religare Broking Ltd, suggested that Nifty may test the 21,800-21,850 zone soon, urging traders to be cautious and make informed decisions in their investment strategies. The overall outlook for the market in the short term remains uncertain, with various external and domestic factors impacting investor confidence and market performance.
