The S&P BSE Sensex slipped below a very important technical level of 26,000 on Monday morning. This has happened for the first time since June and is technically in bearish trend now. The Nifty 50 also slipped below its crucial support level of 8,000 indicating solid bearish grip on the markets.
Why SENSEX is slipping?
The panic selling due to demonetization has been one of the major factors of this continued slide in the markets.
Traders are expecting major selling in the markets as panic has spread due to various reasons. Here are major factors that are leading to another fall in the markets:
- Deutsche Bank cuts Sensex target to 25,000
Factoring the emerging outflows, Deutsche Bank has cut down the Sensex target from 27, 000 to 25,000. Major reasons for the outflows s US Fed’s rate-setting meeting on December 15. Other events such as “outcome of the Italian referendum and the associated depreciation in the yuan” are also impacting.
- Earnings recovery delayed due to demonetization
Many analysts were expecting strong earnings recovery in December quarter but it has shifted. Due to significant demand fall, the recovery has delayed till March or even June quarter of 2017. Demonetization has led to the shift of recovery in realty, consumer durables, capital goods, autos and IT firms.
- Rising US dollar pressure market:
Significant rise in US dollar and rally in US bond yields since US presidential election increased the outflows from emerging markets. All emerging markets funds are witnessing outflows due to Trump’s victory.
- Adjustment to new normal GDP:
Many AMCs have cut the GDP growth target for India by more than 50-80 basis points. The reasons sighted are cash crunch and demonetization. Subdued demand across segments like real estate, construction, gems & jewelry, consumer durables and auto etc. is expected.
- Panic selling due to demonetization:
Dealers say there has been lack of buying interest at institutional desk and the margin calls triggered after the Nifty breached 8000.