Domestic markets opened on Wednesday, September 16, with GIFT NIFTY futures trading marginally lower at around 23,214.50, indicating a negative start for the domestic equity markets. The Nifty slipped to a fresh five-month low of 23,118.60, down 279.50 points or 1.19%, with the Sensex closing down 778 points or 1.04% at 74,003.82. According to Moneycontrol, the Nifty barely managed to hold on to the 23,100 mark by the close of the same trading session, with Tuesday's price action proving there is absolutely no conviction in the market at higher levels. The sell-off has put 23,500 at a distance for the Nifty bulls, with lower levels now coming into play, with the recent swing low of 23,070, which is the low of June 8, and then the 23,000 levels open up on the downside. On the upside, the index has to of course cross 23,250 first, before looking at higher levels, as the market continues to face persistent global headwinds.
Crude oil prices fell on Wednesday after an unexpected build in U.S. crude inventories, with Brent crude futures down 93 cents to $107.82 a barrel and U.S. West Texas Intermediate futures down 97 cents at $104.86 a barrel. Oil prices had settled more than $3 higher and at their highest levels since May 19 on Tuesday, as the Yanbu loading suspension stoked supply concerns and Saudi Arabia cut oil shipments to Europe. US 10-year bond yields were down marginally at 4.99% and 2-year Treasuries at 4.65%, with the dollar trading near multi-week highs ahead of the Federal Reserve's policy decision. The US Federal Reserve is all but set to raise interest rates on Wednesday night, further pressuring global markets. Investor sentiment remained cautious ahead of the US Federal Reserve's policy decision, while elevated crude oil prices and rising US bond yields added to the pressure. The ferocity of the sell-off left market participants guessing, as all three major headwinds continue to weigh on market sentiment.
Broader indices underperformed the main indices significantly, with Nifty Midcap and Smallcap indices shedding more than 2% each. According to Moneycontrol, Indian equity indices ended lower for the second consecutive session amid heightened volatility on September 15, with selling seen across sectors barring IT. Despite mixed global cues, the market opened on a firm note but failed to sustain the gains, turning negative in the initial hours as selling intensified through the session. The tide appears to be turning for HDFC Bank, one of the largest Nifty constituent and a major underperformer this year as we count down towards its next MD & CEO, which as per sources to CNBC-TV18, could be announced in a week or two. The tide may also be turning for India's IT sector as the global AI giants call for slowing of the technology's development, though this may not necessarily mean an immediate structural shift.
Foreign institutional investors (FIIs) extended their selling streak for the fifth consecutive session, offloading equities worth ₹2,977 crore on September 15. Meanwhile, domestic institutional investors (DIIs) bought equities worth ₹2,686 crore during the session. Sudeep Shah of SBI Securities believes that the near-term trend for the Nifty is likely to remain weak as long as the index remains below the 23,280 mark. On the downside, he expects the selling pressure to intensify towards the 22,950 mark, followed by 22,800. Nagaraj Shetti of HDFC Securities noted that the underlying trend of Nifty is sharply down, with a decisive slide below 23,000 levels could drag Nifty down to the next lower area of 22,600 - 22,500 in the near term. The Nifty Bank also broke below the 56,000 level, having cooled off 1,200 points from the day's high, which was near the 57,000 mark on the upside. The index also closed at the day's low after today's CAS, similar to the Nifty, with the Nifty Bank now on the verge of entering a "technical correction", meaning a 10% fall from record high levels.
Despite Nifty trading well below the crucial 24,000 support level amid concerns over rising crude oil and bond yields, derivatives traders remain bullish, continuing to hold maximum put options contracts at this level for the monthly expiry on September 29. As per latest data, the 24,000 put expiring on September 29 had 93,151 contracts outstanding as of Friday, while the 24,000 call had 130,891 contracts outstanding, with both strikes having the highest concentration among all other levels. This means traders expect the market to close at or above 24,000 by month-end, with analysts attributing this stance to expectations of tensions between the US and Iran to abate by the month-end. However, persisting upside pressures on crude oil and global bond yields began forcing some bulls to close out their positions last week, resulting in a steep jump in option prices.
