The Nifty 50 index moved into a correction after falling by over 10% from its highest level this year. It slumped to a low of ₹23,500, its lowest level since June 25 as the sell-off gained momentum.
Top Nifty 50 index companies slump
The main catalyst for the Nifty 50 index crash has been the ongoing sell-off by some of its biggest constituents after earnings.
The biggest mover has been Asian Paints (NS:ASPN), whose stock has moved into a deep bear market after falling by 26% from its highest level this year.
Its sell-off accelerated after the company published weak financial results last week. Its revenue and profits continued falling during the quarter as the domestic decorative coatings volume and margins slumped hard. The company warned about the ongoing subdued demand in the country.
The other top laggard in the Nifty 50 index was Bajaj Auto (NS:BAJA) whose stock plunged to ₹9,500, its lowest level since August 6. Like Asian Paints, the stock has moved into a bear market as it fell by over 255 from its highest level this year.
IndusInd Bank (NS:INBK) is another top laggard in the index as its stock imploded to the lowest level since April 2023. It has fallen by almost 40% from the year-to-date high, making it the worst-performing bank stocks in the country.
Trent (NS:TREN), which has been one of the best-performing companies in India, has also suffered a harsh reversal. After peaking at ₹8,325 in October, the retailer has plunged by 22.3% and is hovering at the lowest swing on August 12.
Companies in the Tata Group Holdings are also not doing well. After being one of the best-performing Nifty 50 index stocks this year, Tata Motor share price has dropped in the past seven consecutive days, falling to its lowest level since January. It has plunged by over 34% from the year-to-date high.
Tata Consumer Products (NS:TACN) shares have collapsed to ₹925, the lowest level since December 13. It has dropped by 25%, after it formed a double-top pattern at ₹1,243.
Many other Nifty 50 constituent companies have suffered a harsh reversal in the past few weeks. Other notable laggards were companies like Tata Steel (NS:TISC), NTPC (NS:NTPC), Hindalco Industries (NS:HALC), Hero MotoCorp (NS:HROM), and Hindustan Unilever (NS:HLL).
On the other hand, some of the most notable gainers in the last 30 days are companies like Wipro (NS:WIPR), Tech Mahindra (NS:TEML), ICICI Bank (NS:ICBK), and Eicher Motors (NS:EICH).
Read more: Tata Steel share price is beating rivals; remains in a correction
India could benefit from China-US tensions
The main reason why the Nifty 50 index has plummeted is the recent Trump election in the US, which analysts estimate will lead to volatility in the coming months. Trump has threatened major tariffs, especially on Chinese goods and has appointed Marco Rubio, a hawk, to become the Secretary of the State.
India could become a big beneficiary of these tensions because it has a cordial relationship with the United States. It could see more companies move to the country to bypass America’s tensions and sanctions.
The Nifty 50 index has also plunged as many retail investors who bought stocks started to unwind their trades. Most importantly, the Reserve Bank of India (RBI) has resisted cutting interest rates, a move that most central banks have done.
Nifty 50 index analysis
Nifty 50 chart by TradingView
The Nifty 50 index has crashed hard in the past few weeks. It has dropped from a high of ₹26,267 in September to ₹23,532, its lowest level since June 25. It has dropped below the 50-day and 25-day Exponential Moving Averages (EMA).
The Nifty 50 index has moved to the ultimate support at ₹23,437. At the same time, the MACD indicator has moved below the zero line, while the Relative Strength Index (RSI) has moved to the oversold level. Therefore, the index will likely continue falling as sellers target the extreme oversold level at ₹22,656.
The bearish view will become invalid if the stock rises above the strong pivot reverse point at ₹24,218.