Bloodbath on D-Street: Sensex Crashes 1,200 Points, Nifty Ends Near 23,900 – Key Reasons Behind the Market Mayhem

Bloodbath on D-Street: Sensex Crashes 1,200 Points, Nifty Ends Near 23,900 – Key Reasons Behind the Market Mayhem

The Indian stock markets witnessed a sharp sell-off on Thursday, November 28, as benchmark indices Sensex and Nifty plummeted around 1.5%. The slide was driven by weak global cues, cautious sentiment surrounding US Federal Reserve policies, and profit-booking ahead of the monthly F&O expiry. IT and auto stocks emerged as the biggest losers, adding to the market’s woes.

At the close of trade, the BSE Sensex tanked 1,190 points to settle at 79,044, while the NSE Nifty dropped 361 points to close at 23,914, slipping below the crucial 24,000 mark. Despite the carnage, market breadth remained marginally positive with 2,156 stocks advancing, 1,632 declining, and 101 remaining unchanged.

Here are the key factors that contributed to the market’s downfall today:

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1. Weakness in IT and Auto Stocks

IT stocks bore the brunt of the sell-off, as concerns over US inflation data weighed heavily on sentiment. The Nifty IT index slipped 2.4%, with major names like Infosys (-3.5%), TCS (-1.8%), and HCL Tech (-2.5%) leading the decline.

The impact of the US inflation data has raised fears of reduced client spending for IT companies, many of which rely heavily on the US market.

Auto stocks also faced selling pressure, with the Nifty Auto index closing 1.6% lower. Mahindra & Mahindra emerged as the top laggard, shedding 3.4%.

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2. Global Rate Concerns & US Fed Caution

Markets across the globe reacted to the latest US Core PCE Price Index data, which showed a year-on-year rise of 2.8% in October. This dampened hopes of an immediate rate cut by the US Federal Reserve.

Elevated interest rates in the US often translate to weaker equity performance globally, and Indian markets were no exception.

Krishna Rao, co-head of equity broking at JM Financial Services, noted, “The Fed’s cautious stance and higher growth prospects in the US signal a slower pace of rate cuts, which may continue to weigh on equity markets.”

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3. Weak Asian Cues

Asian markets further dragged sentiment, with Chinese stocks leading the decline. A lack of fresh stimulus measures from Beijing ahead of a crucial policy meeting spooked investors, causing a ripple effect across emerging markets, including India.

The underperformance of Chinese equities also discouraged foreign portfolio flows into Indian markets.

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4. Profit-Booking Ahead of F&O Expiry

The monthly F&O expiry heightened volatility, as traders locked in profits and rolled over positions.

Ajit Mishra, SVP Research at Religare Broking, said, “The market had been consolidating in a narrow range for the past few sessions. With the monthly expiry today, bears seized the opportunity to capitalize on weak sentiment and pushed indices lower.”

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5. Technical and Valuation Challenges

The Nifty faced stiff resistance near the 24,320-24,350 range, coinciding with its 100-day EMA. As per Sudeep Shah, Head of Technical & Derivatives at SBICAP Securities, “A breach of 24,130 triggered further selling pressure, dragging the index towards 23,980.”

Valuations have also been a concern, with many analysts suggesting that Indian markets are overdue for a correction. Anirudh Garg of Invasset PMS advised investors to raise cash levels in their portfolios, citing stretched valuations and the need for consolidation at current levels.

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Outlook for Investors

The sharp sell-off today reflects a mix of global and domestic headwinds, making it essential for investors to tread cautiously. While the current correction offers selective buying opportunities, elevated valuations and global uncertainties warrant a disciplined approach.

Keep an eye on global market cues, domestic economic data, and US Fed commentary to navigate the coming sessions effectively.

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