- Summary:
- The Securities and Exchange Board of India's timing of stricter regulations could extend Nifty 50's decline as risk appetite reduces.
Nifty 50 Index extended its decline on Thursday, caving in on new restrictions by the market regulator and mounting FUD sentiment driven by geopolitical events in the Middle East. The Index was down by 2 percent at the time of writing, bringing its weekly losses to 3.5 percent. The Index’s decline this week mirrors performances by US markets where the S&P 500, the Nasdaq and the Dow Jones have been on a downward trajectory this week.
The Middle East conflict has experienced a spike in hostilities in recent days, injecting panic in the market. With Iran and Israel escalating their war rhetoric, many investors have restrained their appetite, with selling pressure mounting after recent historic highs. The Nifty 50 Index (INDEXNSE: NIFTY_50) has felt the impact, as Foreign Institutional Investors were net sellers in the last three trading sessions.
Meanwhile, the Securities and Exchange Board of India (SEBI) has announced stricter rules to curb speculation in the country’s derivatives market. The regulator raised the minimum volume by nearly triple and limited the number of options contracts per exchange to one per week, among other measures.
By limiting investors’ freedom to determine their risk appetite, SEBI risks stifling growth in the Indian securities markets and that could extend the Nifty 50 Index’s downside. Also, some investors are eyeing China’s stock markets following the recent monetary stimulus, adding to the downward pressure on the Index.
Nifty 50 Index today
The Nifty 50 index is currently on a downward momentum, and the decline could extend if resistance persists at 25,380. The first support will likely be at 25,197, but a stronger bearish momentum could break below that level to test 25,067.
Conversely, moving above 25,380 will shift the momentum toward the upside. In that case, the next barrier will likely be at 25,509, but if the buyers strengthen their push, they could turn that mark into a support level and invalidate the downside narrative. Also, the resulting momentum could test 25,602.
