Nifty below 17500, Sensex down 900 points - How it happened
The Indian market declined around one and half per cent amid profit-booking and weak global cues on Monday. Extending weakness to second straight day, the broader Nifty50 ended around 17,500, while the Sensex tanked nearly 800 points to settle close to 58, 800.
India Volatility Index (VIX) shot up to end at 19-mark with a change of over four per cent.
Tata Consumer, ITC, Britannia, Nestle India were among top gainers on the benchmarks.Tata Steel, Tata Motors, Adani Ports, Asian Paints, Divis Laboratories, Wipro and Ultratech cements were among top laggards
The current risk reward is not favouring investors as the Nifty50 is now trading at a premium valuation of 21.5x P/E (1yr fwd basis), above the long-term average. Rising dollar index and higher US10 year bond yield act as the near-term headwinds for the market
The market is delicately poised with higher downward risk. The sustained FII buying is positive. But FIIs are unlikely to buy aggressively in the present context of rising dollar. The dollar index is back above 108 and the US 10-year bond yield is at 2.99%.
India's impressive GDP growth and favorable leading indicators in the context of global growth slowdown have the potential to attract more FII flows but the rising dollar and bond yields are strong headwinds.
the Nifty has re-entered the declining broadening pattern, we expect the index to respect 17,300 levels.
The Nifty had formed a Shooting Star candlestick pattern on the weekly chart for the last week. Also, on the daily chart the index had seen few bearish developments on August 19. Thus, follow through action was witnessed on the downside on August 22.