Lok Sabha elections, global cues: Reasons why Sensex fell 668 pts today

Stock market updates, May 29: According to a Bloomberg News survey, Indian stocks need PM Narendra Modi's party to win more than 303 seats in the general election to extend their rally

Stock market updates today, May 29: Indian stock markets saw intense selling on Wednesday, May 29, 2024. The S&P BSE Sensex declined 716 points intraday to hit a low of 74,455. The NSE Nifty50, on the other hand, slipped 203 points to a low of 22,685.

The S&P BSE Sensex, eventually closed with loss of 668 points, or 0.89 per cent, at 74,503. The Nifty50, on the other hand, settled at 22,705, down 183 points or 0.8 per cent. 

SBI Life, HDFC Life, ICICI Bank, Ultratech Cement, Tech M, HDFC Bank, Bajaj Finserv, Axis Bank, Tata Consumer Products, BPCL, and ONGC were the top laggards in the large-cap space, falling between 1 per cent and 3 per cent.

Meanwhile, in the broader market, the BSE MidCap index was below the flat line, slipping nearly 0.4 per cent.

The BSE SmallCap index, however, was the only gainer, up 0.23 per cent.

"Weak global cues prompted investors to take profits ahead of the US core PCE data, a key gauge of inflation that is anticipated to rise. Continued soaring of global inflation, like latest trend in Japan and Australia is diminishing investor expectation of a US Fed rate cut in the near term. Broad based weakness is noticed across the sectors with heavy underperformance from financials and IT," said Vinod Nair, head of research, Geojit Financial Services.

Here are the top reasons why markets are falling today, May 29, 2024:

Nervousness ahead of Lok Sabha election result: Analysts attribute the ongoing market volatility with the nervousness ahead of the Lok Sabha election result. due on June 4, 2024.
 

While markets are confident of the ruling Bharatiya Janata Party (BJP) returning to power, they fear a low margin of victory may stop the government from taking bold reforms.

According to a Bloomberg News survey of market participants, Indian stocks need Prime Minister Narendra Modi's party to win more than 303 seats in the general election to extend their record rally.

A smaller majority for the ruling Bharatiya Janata Party may lead to a drop of about 2 per cent in the NSE Nifty 50 Index. READ MORE

Weakness in global markets: Asia-Pacific markets ended sharply lower on Wednesday with Kospi, and Hang Seng tumbling 1.7 per cent each. Further, ASX200 dropped 1.3 per cent, and Nikkei fell 0.8 per cent.

European stock markets, too, opened lower on Wednesday following their worst session for a month on Tuesday.

FTSE100 was down 0.22 per cent, DAX 0.4 per cent, CAC40 0.5 per cent, and Stoxx600 0.4 per cent.

On Wall Street, futures tied to Dow Jones, S&P500, and Nasdaq, too, were down 0.3 per cent each in the pre-market session.

Wall Street will track the second estimate of Q1CY24 GDP data, to be released on Thursday, May 30.

Bond yields: US bond yields are back above 4.5 per cent, while, in India, the yields on 10-year government bonds are above 7-per cent mark. Higher yields make debt investment attractive, thereby making risk-reward for equity investment unfavourable.

FII selling: Indian equities' relatively expensive valuations have forced foreign investors to book profit. Thus far in the month of May, FIIs have sold shares worth Rs 34,935.53 crore.

Technical factors: According to Osho Krishan, senior analyst - technical & derivative research, Angel One, the 22,800-22,700 levels are likely to be seen as immediate support for the Nifty. On the flip side, the 23,000-mark seems to be a significant hurdle, followed by the lifetime high zone around 23,100.