The Nifty50 slipped below its crucial psychological level of the 8,550 level weighed down by losses in realty, power, oil & gas, metals, consumer durables, capital goods and banking stocks.
So why is the market crashing? Going by the buzz on Dalal Street, here are the top five factors weighing on the market:
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An ABC News-Washington Post poll showed Democratic candidate Hillary Clinton with just a 1 percentage point lead, a gap that is within the margin of error.
“We think the calmer scenario clearly is status quo, which ultimately would be Hillary. But if we are going to see a Donald Trump win, it would be disruptive for Asia,” Hartmut Issel, Head of Equities & Credit for Apac, UBS Wealth Management, said in an interview with ETNow.
A rate hike by the US Federal Reserve is likely to result in a strong dollar and a weak rupee. “If the US Fed starts raising interest rates from December, whose chances are very bright, then there could be some debt outflow from India like from other emerging markets,” Dr Rupa Rege Nitsure, Chief Economist, L&T Financial Services, said in an interview with ETNow.
“Luckily, we have good foreign exchange reserve buffer and RBI has been managing the currency quite well. So depreciation will be orderly but definitely currency will depreciate and we may see its lowest level in December. That is my take,” Nitsure said.
FIIs sold Rs 535 crore worth of contract in index futures and bought Rs 184 crore worth of contracts in index options. In stock futures, they bought positions worth Rs 696 crore.
Brent crude was down 22 cents at $47.92. In the previous session, it hit a one-month low of $47.72 before settling down for the day at $48.14 ahead of official US stockpile figures.
Goldman Sachs sees crude hitting $40 a barrel if Opec decides not to cut oil output at its meeting scheduled for this month. “Lack of progress on implementing production quotas and growing discord between the Opec producers suggest a lower probability of reaching a deal on November 30,” Goldman analysts, including Damien Courvalin, wrote in a note dated October 31.
The market failed to stay above its crucial resistance level of 8,650 on Tuesday as selling pressure gripped the market. “Traders are advised to remain cautious and square off long positions below the 8,550 level without waiting for the Nifty50 to breach the 8,500 level,” Mazhar Mohammad, Chief Strategist - Technical Research & Trading Advisory, Chartviewindia.in, told ETMarkets.com.
Rohit Gadia, Founder & CEO, CapitalVia Global Research, said the market is likely to stay volatile and directionless, which is going to be difficult to handle from a short-term trading perspective.
“Positional traders should wait for a breakout of the range between 8,600 and 8,700 levels before they enter the market,” he said.