Benchmark indices started the day lower on Friday, following a trend of losses in Asian markets. This decline was influenced by the uncertainty surrounding the Federal Reserve’s interest rate decision due to inconclusive US jobs data.
As of 9:23 am, the S&P BSE Sensex was down by 131 points at 85,501.03, while the NSE Nifty50 had slipped 40.70 points to 26,151.45. Early trading showed heightened volatility with all major sectoral indices in negative territory, reflecting a cautious sentiment on Dalal Street.
Dr. VK Vijayakumar, the Chief Investment Strategist at Geojit Financial Services, highlighted a significant increase in market volatility. He noted the Nasdaq’s 2.15% drop on Thursday, with a 4.4% decrease from its peak, suggesting potential turbulence ahead.
Concerns about overvalued AI stocks have raised bubble alerts, although Nvidia’s CEO Jensen Huang has disputed this notion. Vijayakumar mentioned the possibility of renewed interest in AI stocks if their valuations become more attractive.
He also raised concerns about excessive speculative trading in recent Indian stock listings, advising retail investors to avoid such risky trades. In the current market scenario, he recommended accumulating fundamentally sound stocks at lower prices and exercising patience.
Vijayakumar expressed that India has been trailing in the global AI trade this year. If the AI sector cools down and capital flows into non-AI segments, India could benefit. However, a significant global market correction would impact all markets, including India, and he suggested monitoring the evolving situation.
Anand James, the Chief Market Strategist at Geojit Financial Services, observed that Nifty’s breakout above a month-long range increases the likelihood of reaching 26,550 in the short term. However, a brief breach above the upper Bollinger band on Thursday, followed by a quick retreat, indicates limited upside potential for the day.
He highlighted the importance of Nifty holding above 26,237 to sustain positive momentum. Failing to maintain this level or an immediate drop below 26,160 could empower bearish sentiment, with downside targets at 26,028 to 25,984.
Overall, market participants are advised to monitor the unfolding developments closely to navigate the current market conditions effectively.