Indian stock market caught in the grip of bearish trend, yet again
The Indian stock market once again fell into the grip of a bearish trend last week. All five trading days of the week ended in the red, marking the biggest weekly decline in the past two years. The impact of the downturn is evident from the fact that all sectors on the index showed a decline, with some sectors facing such deep falls that recovery could take time. Foreign Institutional Investors (FII) played a significant role in this decline, as they sold stocks worth Rs 15,828.11 crore. On the other hand, Domestic Institutional Investors (DII) attempted to stabilize the market by buying Rs 11,873.92 crore worth of stocks.
The downturn has once again conveyed a crucial message to investors who were riding high on the bullish trend: profits are not just made by the increase in share prices but only when those profits are reflected in the bank account. At present, it is uncertain when the next phase of a bull market will begin, largely due to the ongoing turmoil in international markets. Since the U.S. and Europe will be on holiday during the last week of December for Christmas, it is assumed that there might not be further sharp declines in the Indian markets. However, the chances of a market recovery in the short term seem equally slim. Traders believe that fluctuations will continue in the remaining days of December, and investors should focus on companies with strong fundamentals. Whenever possible, they should seize partial investment opportunities. Given the current circumstances, investments made cautiously in the market will provide opportunities to earn profits.
On Friday, the market witnessed such a severe downturn that even the most patient investors lost their calm. The BSE index recorded a decline of 4,091.52 points (4.98%) and closed at 78,041.59 points. Similarly, the NSE Nifty index dropped by 1,180.80 points (4.77%) and closed at 23,587.50 points.
The decline was also reflected in the midcap and smallcap indices. However, it is noteworthy that these indices closed with slightly lesser losses compared to the main indices, which suggests a potential recovery in the future. In the current situation, expectations are highest from select midcap and largecap stocks. As for the bullion market, international weakness led to a decline in the prices of gold and silver this week. In Jaipur’s Sarrafa market last week, the price of 24-carat gold fell by Rs 500 per 10 grams, reaching Rs 78,300 per 10 grams, compared to Rs 78,800 per 10 grams the previous Saturday. Silver also saw a drop of Rs 2,500 per kilogram, falling to Rs 89,600 per kilogram from Rs 92,100 per kilogram last week. Given the potential for instability in international markets and weak demand, further weakness in gold and silver prices is expected this week. Traders predict more volatility in the market this week. They suggest that the monthly settlement of futures markets is also approaching, and hence, the market direction will likely become clearer only after December.
Risk-taking investors may consider limited investments in companies like Suzlon, Vishal Mega Mart, Delivery Limited, Indian Hotels, Fcon Infra, NMDC, Chambal Fertilizers, State Bank of India, Sirma SGS Technology, Tata Motors, Tata Power, HAL, among others
