The BSE Sensex index found support at the 200-day moving average at ₹77,578 as the sell-off in Indian stocks dropped. The index, which tracks some of the biggest companies in the country, has dropped by almost 10% below its highest level this year. It is hovering near its lowest level since June this year.
Indian stocks sell-off continue
The BSE Sensex index has erased some of the gains made earlier this year as several large companies continued retreating.
IndusInd Bank shares have been the worst-performing in the index after falling by 37% this year. This drop happened as analysts continued to downgrade the stock. According to Makets Mojo, it has a sell rating mostly because of its weak financial results.
The other top laggard in the Index is Asian Paints, one of India’s biggest paint and coatings company. Its stock has dropped by over 27% this year as growth in the industry deteriorated.
Nestle India’s stock has dropped by 16.5% as slowdown in the food business accelerated. Just this week, Nestle announced a big cost-cut strategy as it seeks to save at least $2 billion in funds. Titan Company, which is partly owned by Tata Group, has falen by over 12% this year.
Still, many other companies in the BSE Sensex index have done well this year. Sun Pharma shares have jumped by over 40%, while Tech Mahindra is up by 34%. Mahindra & Mahindra, one of India’s top manufacturers, has risen by 70%, while Bharti Airtel rose by 47%.
Indian economic growth and RBI
The BSE Sensex index has dropped even as the Indian economy continued doing well. Analysts expect that India will overtake Germany and India in the next few years and become the third-biggest country by GDP after the US and China.
Moody’s anticipates that the Indian economy will grow by 7.2% this year. Some analysts, however, see the economy slowing to 6.5% in the next calendar year.
One of the potential risk will be the rising geopolitical issues now that Trump has pledged to implement large tariffs on all imports. This will be a notable thing since the US is one of the biggest trading partner in India.
The Sensex has also retreated because of the hawkish tone by the Reserve Bank of India (RBI). Unlike other central banks, the RBI has maintained high interest rates and hinted that it will not cut in the near term.
Additionally, there is a sign that many retail investors who helped to push the index higher have started to take profits. The index has also fallen because of the tumbling Indian rupee, which has moved to a record low of 84.5 against the US dollar.
BSE Sensex index analysis
The daily chart shows that the BSE Sensex peaked at ₹86,018 on September 18 and has then suffered a harsh reversal, moving into a correction. It has dropped below the important support level at ₹82,765, its highest level on September 2.
The index has also fallen below the 50-day Exponential Moving Average (EMA). It has found support at the 200-day moving average, while the Relative Strength Index (RSI) and the Stochastic Oscillator have moved to the oversold levels.
Therefore, the index will likely bounce back if bulls manage to hold steady above the 200-day moving average. If this happens, the next level to watch will be at ₹82,764,
On the other hand, if the index loses the 200 EMA, there are chances that it will continue falling as sellers target the important support level at ₹70,318, the lowest swing on June 4, which is about 9% below the current level.
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