Ruchit Jain, Lead Research, 5paisa.com: Short term trend looks negative
FinTech BizNews Service
Mumbai, August 5, 2024: Indian stock market benchmark indices Nifty 50 and Sensex crashed more than 3% each as sell-off intensified across the board today, Monday, August 5,2024. Today Sensex experienced a significant drop of 2,222 points and the Nifty ended close to 24,050.
Indian government bonds eligible for index inclusion saw the highest-ever overseas inflows last week, suggesting the central bank’s curbs on the securities have done little to dampen investor sentiment.
The global equity markets plummeted as the sell-off was fuelled by growing concerns that the US economy is slowing and the Federal Reserve is behind the curve with policy support.
On the sidelines of above mentioned developments, Vishal Goenka, Co-Founder of IndiaBonds.com explains the importance of portfolio diversification amongst asset classes to sustain volatile market sentiment: “During uncertain global equity markets, portfolio diversification is the key to sustaining long term investment returns. Investors have largely been focused on equities which have provided tremendous returns in the past. However, given the big global moves it is prudent to invest in other liquid low volatility financial assets such as bonds. One can choose from long tenor government bonds to high yielding corporates to buffer from the volatility and supplement their portfolios with regular income. It takes just 5mins to invest on SEBI-registered Online Bond Platforms. A balanced approach to investment portfolio with adequate amount of research is always a requirement for prudent investment approach for investors.”
Ruchit Jain, Lead Research, 5paisa.com, believes: “The negative global cues led to a significant gap down for Nifty at the start of the week. The index corrected to make an intraday low below 23900, but it managed to end the day above 24000 with a loss of more than two and a half percent. Our markets reacted sharply to the global equity markets sell-off seen on Friday evening. However, our markets had already indicated probability of a short-term corrective phase during end of last week as the Nifty had a negative divergence with the RSI. INDIA VIX, surprisingly rallied by 50 percent during the day to surpass the 20 mark, which indicates nervousness due to uncertain global environment. The CBOE VIX (volatility index in U.S.) also rallied sharply and such sharp up moves in VIX are not seen in normal dips within an uptrend. Technically, Nifty has now breached its 40-DEMA support and has formed a ‘Lower Low’ compared to the recent ‘Budget Day’ swing low of 24074. Hence, the short term trend looks negative.”
The Bank Nifty index breached its swing low support of 50440 and corrected sharply along with the benchmark index. Ruchit Jain adds: “The Bank index too rebounded marginally from the 50 percent retracement support level which was placed around 49720..”
