The pain in the market continues after a slow start. The Sensex is down over 700 points and the Nifty has slipped lower below 22,900. What is particularly worrying is that the selloff is significantly striking in the mid and small-cap space. The BSE Midcap Index is down nearly 3% while the BSE Small Cap Index has cracked a whopping 4%.
Some of the key reasons playing on investor sentiment include muted earnings performance as well as the continuing outflow by Foreign Investors. These factors have dented investor sentiment no doubt and nearly Rs 9 lakh crore of investor wealth has been wiped out.
The Nifty, in fact, is on track to break a 23-year record with 4 straight months of decline.
“The index has now declined for three straight weeks, the longest such streak since late October. Technically speaking, breaking above 23475 is needed in the near-term for a bullish flip, but till that happens 22976 will remain vulnerable with the longer-term focus in the 22500 – 22800 area,” said Akshay Chinchalkar, Head of Research, Axis Securities.
“The market sentiment has turned weak. Sustained FPI selling (Rs 69000 crores in January, so far) is impacting the market. Despite DII buying of Rs 67000 crores in January, so far, the market is under pressure. A major concern is that President Trump is coming up with new threats like the 25 % tariff on Columbia for its refusal to take back deported illegal immigrants. The threatened 25% tariff on Canada and Mexico might be implemented from February 1st onwards. Therefore, will Trump walk his talk on other threats including tariffs on China and other countries, is a question that is being asked in economic and market circles now. These concerns are weighing on the markets,” said V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services.
