Indian equity markets extended their decline for the third consecutive day, with the S&P BSE Sensex falling 813.35 points or 1.08% to 74,764.23 and the Nifty 50 declining 203.60 points or 0.86% to 23,431.50, marking the lowest level in three months. According to CNBC TV18, the Nifty gave up the 23,500 mark as the market slipped to its lowest level in three months. The sell-off was broad-based, with 38 of the 50 Nifty stocks ending lower, with IT, realty and media shares leading the fall. The India VIX rose 0.40% to 11.21, signalling continued rise in near-term market volatility, with the market breadth negative as 2,485 shares fell against 1,886 rising on the BSE. Over the past three consecutive trading sessions, the Sensex and Nifty have declined 2.29% and 1.95% respectively. In the broader market, the BSE 150 MidCap Index fell 0.33% and the BSE 250 SmallCap Index declined 0.50%. The Nifty Bank fell 482 points to 56,296, while the Midcap index declined 323 points to 62,593.
Foreign institutional investors' (FIIs) bearish bets in index futures have climbed to their highest level in about five months, signaling potential for a significant market move amid weak market sentiment. According to The Hindu BusinessLine, FIIs held 3,21,538 short index futures contracts against 39,694 long contracts on September 10, taking the long-short ratio to around 11 per cent, a historically low level. As reported by The Hindu BusinessLine, FII short positions have risen steadily and are now at levels last seen around April. Anand James, Chief Market Strategist at Geojit Investments, noted that "We have not seen such a build-up in index futures shorts for a long time. The current positioning is among the highest seen this year." Sudhakar Reddy, Associate Professor at IIM Calcutta, emphasized that "Markets typically turn bullish when the FII long-short position ratio rises above 40 per cent. With the ratio currently around 11 per cent, market positioning remains highly bearish."
The Nifty 50 ended the session at its lowest level since June 11, with the index starting the session on a weak note and opening nearly 113 points lower. Although it attempted a recovery during the first half of the trading session, selling pressure returned in the afternoon. From the day's high of 23,571.55, the index slipped nearly 140 points and closed near the day's low. The daily chart formed a sizeable bearish candle with a lower high and lower low formation, along with a downside gap. The continued selling pressure pushed the index below the important support zone of 23,600. From the August 26 high, the Nifty has declined 947.10 points or 3.88%, currently trading 2.66% below its 20-DMA, indicating weakness in the short-term trend. The index also closed below the lower Bollinger Band and 8-EMA, suggesting that the price has moved far, too fast, increasing the possibility of a short-term mean reversion.
The sizeable short base could fuel a strong short-covering rally if sentiment improves, as current positioning resembles levels seen around April, which preceded a sharp market rebound. According to The Hindu BusinessLine, Anand James noted that the sharp build-up in FII index futures shorts suggests that traders are positioning for a significant move. However, he cautioned that "a sustained rally would require stronger fundamental triggers and did not foresee an immediate return to record highs." Sudhakar Reddy emphasized that any improvement in sentiment could trigger a strong short-covering rally, as the current positioning at historically low levels could amplify any positive sentiment shift. The market is closely tracking inflation data, interest-rate expectations, oil prices and global bond yields for cues that could trigger such a reversal.
Adani Enterprises was the top Nifty gainer, rising more than 5% following a report on fundraising by Adani Airports. Adani Ports gained 3% after an order win for Paradip Port. Power-related stocks also saw buying, with Adani Power, Bharat Heavy Electricals (BHEL) and Torrent Power among the top gainers. Among midcaps, Jindal Stainless (JSL), Paytm, Swiggy, Cummins and National Aluminium Company (NALCO) were among the top gainers. From the Sensex basket, Max Healthcare Institute Ltd, Adani Ports & Special Economic Zone Ltd, Coal India Ltd, Tata Steel Ltd, Apollo Hospitals Enterprise Ltd and Trent Ltd were the major gainers. Infosys Ltd, HCL Technologies Ltd, Tech Mahindra Ltd, Wipro Ltd, Tata Consultancy Services Ltd and Hindustan Unilever Ltd were the biggest laggards. Insurance stocks also saw sharp declines despite healthy August data, with HDFC Life falling 4% while HDFC Bank remained weak, declining nearly 2% to end at a 52-week low.
Apollo Hospitals Enterprise has witnessed a bullish breakout after moving above the upper boundary of a symmetrical triangle pattern. The stock has also surpassed its previous minor highs and closed above the three-week tight consolidation zone, indicating renewed buying interest. The breakout has been supported by strong volumes, which have remained elevated over the past three trading sessions. The stock's Relative Strength (RS) line has moved to a new high, highlighting its outperformance compared with the broader market and other listed stocks. Currently, the stock is trading about 1% below its all-time high, while all major short-term and long-term moving averages are trending upward, confirming a strong bullish structure. The Bollinger Bands have started expanding, indicating a rise in volatility with a positive bias, while the moving average ribbon continues to point higher. Momentum indicators are also supporting the bullish view, with the MACD generating a fresh bullish crossover and the KST and Stochastic RSI indicators remaining in positive territory.
