Understanding India’s Share Market Trends
Market(Nifty and Sensex) Decline and Investor Caution
Nifty & Sensex – India’s share market has been on a downward trend for the past three days, with Nifty losing almost 600 points since Monday. This drop comes as investors are being careful and taking their profits after a big jump in prices before the US Federal Reserve’s policy announcement today. The NSE index has fallen by 2.5 percent since Friday, following a strong 6.1 percent increase from the end of November.
Reasons for the Market Fall
The recent decline in the market is due to investors selling their shares to make a profit after the NSE index went up by 6-7 percent from its low point on November 21st. Kunal Rambhia, a fund manager and trading strategist, explained that it’s common for the market to correct itself by around 40 percent before big announcements like the US Fed decision.
Investor Strategies
Investors are being cautious and waiting on the sidelines due to profit booking and uncertainty about the Fed decision. Kranthi Bathini, a director of equity strategy, suggested that investors keep an eye on the Nifty level of 24,000 and be careful with their investments. Short-term investors should be cautious and set strict stop losses, while long-term investors can take advantage of the market dip to buy more shares.
Impact of US Fed Decision
If the US Federal Reserve decides not to cut interest rates as expected, the Indian market could see a further decline of 3-4 percent. Rambhia mentioned that a rate cut of 25 basis points is likely, but if it doesn’t happen, the market could consolidate with a positive bias. Bathini emphasized the importance of the Fed’s commentary on future rate cuts and how it could affect the Indian market in the long run.
Future Market Predictions
The upcoming Reserve Bank of India’s Monetary Policy Committee meeting in February will be crucial, especially under the new Governor Sanjay Malhotra. Rambhia suggested that India may not follow the US in cutting rates, which could impact the market performance. Both experts recommended sector-specific investment strategies, with Rambhia focusing on stock and sector plays leading up to the Union Budget, and Bathini suggesting investments in FMCG and pharma stocks for stability.