The free fall of the Indian stock market continued on the trading day of Friday yesterday. Experts are opining that profit booking ahead of the Union Budget 2021 which is tomorrow i.e. February 1, 2021 is the reason for the non-stop decline.
The benchmarks of Indian stock market – the sensitive index (Sensex) and the Nifty 50 did break into lifetime highs recently, and these were of important psychological levels. Sensex breached 50,000 and Nifty 50 breached 15,000.
Joe Biden’s ascension as the new president of the United States, and his proposed financial stimulus helped the markets rise. Further push was given by reduction in cases of COVID-19.
However, the markets had difficulty staying there and fell. Selling by foreign institutional investors, which increased as the date for the Budget approached quickened the fall of the Indian stock market. It is worthwhile to note that more Rs 12,000 crore have been taken out of the Indian stock market in the cash segment (i.e. delivery of stocks).
Also read: Analysis of the Economic Survey 2021
Things to watch out include in addition to the Budget, the quarterly earnings of more than 400 companies will be released in the first five days of February. The earning releases so far have been stable.
Technical analysis-wise, experts see an important support at 13,400 levels and a closing above 14,000 would be required to give bulls confidence that the current downfall is only a pullback.