The domestic indices opened flat on Friday after closing in red on Wednesday. The intense selling pressure in the market can be attributed to FII pulling out of the Indian market and chasing lower valuations elsewhere.
After juggling between gains and losses in the early morning trade, bears seem to have taken over as indices experience significant selling pressure, extending sharp losses for the second session.
The BSE Sensex opened flat at 60,388 points and after touching the day's high at 60,537 points but it sank below the 60,000 level, while Nifty-50 opened above the 18,000 level but plunged below to trade close to the 17,900 level and Bank Nifty opened well above 42,500 but quickly dropped more than 1% intraday.
As of 1:55, Sensex is trading down 530 points or 0.9% to 59,820 points, whereas Nifty dropped 144 points or 0.9 % to 17,842 points, and banking gauge Nifty Bank sank almost 600 points or 1.4% to 42,039 points.
Commenting on support and resistance levels for Nifty, Sameet Chavan, Chief Analyst-Technical and Derivatives, Angel One, said, "We continue to see 17900 – 17750 as a sacrosanct support zone and the moment we see positivity from the global peers, we are good to move higher. On the higher side, 18060, followed by 18140 should be seen as intraday hurdles. A move beyond this would bring back good traction in most of the recent beaten counters."
Commenting on the reason behind selloff pressure, Dr. V K Vijayakumar, Chief Investment Strategist, Geojit Financial Services said, "The major drag on the market now is the sustained selling by FIIs. FIIs sold for the 10th consecutive day yesterday taking the cumulative selling to Rs 11400 crores. The underperformers of last year like China and Europe are doing well. Clearly, FII money is chasing lower valuations by selling in overvalued markets like India. This trend might continue imparting weakness in the Indian market."
Wall Street fell on Thursday on the back of a strong labor market. Investors want to see weakness in the labor market as it will signal the fed that rate hikes are working on taming inflation but preliminary data showed a fall in weekly jobless claims.
The Dow dropped almost 340 points or 1.02%, while S&P 500 lost 44 points or 1.2% and Nasdaq declined 153 points or 1.5% on Thursday.
Mike Loewengart of Morgan Stanley Global Investment Office said, "While we will get a better overall picture of the jobs market tomorrow, private payrolls beating expectations and jobless claims coming in below are indications that the labor market remains resilient."
