Markets witnessed a bloodbath on Wednesday with Sensex and Nifty 50 plummeting over 1.5% each ahead of monthly F&O expiry. Feeble global cues are the biggest reason for the broad-based selloff at home as investors focus on RBI and Fed minutes which are hoped to give some clarity on the rate hike cycle ahead and inflation going forward. Banking stocks took a massive heat, while a significant drop was also seen in IT, metal, energy, and financial stocks. Heavyweight Reliance Industries, along with Bajaj and HDFC twins further dragged the performance.
Markets have tumbled for the fourth day in a row, seeing their biggest losing streak in five months. Sensex has erased its psychological level of 60,000 mark and the Nifty 50 was toppled below 17,600. That being said, Sensex and Nifty 50 closed on their lowest reading since October 19 last year.
Sensex shed 927.74 points or 1.53% to end at 59,744.98. While Nifty 50 dipped by 272.40 points or 1.53% to close at 17,554.30.
With Sensex falling below 60,000 levels, investors' wealth of ₹3,87,228.19 crore has been eroded on Wednesday.
ITC was the only stock to be in the green on Sensex, however, due to the bearish bandwagon the upside was limited.
Bajaj and HDFC twins weighed heavily on the market. Bajaj Finance emerged as the top loser plunging by nearly 2.9%. While its parent Bajaj Finserv declined by 2.4%. Further, HDFC Bank and HDFC tumbled by nearly 2% each. M&M stock was the other laggard which dipped by 2.5% on Sensex.
Reliance Industries' stock price corrected sharply as well. The heavyweight closed at ₹2,379 per piece down by 2.3% on profit booking.
Also, Adani Group's stocks have seen the worst day. The group's market capitalisation is now down 70% from its peak, from around Rs.25 lakh crore to 7.55 lakh crore. All the Adani stocks closed in the red.
In broader markets, BSE Sensex Next 50 plunged by a massive 623 points or 1.3%. While Midcap and SmallCap indexes too recorded a significant drop of around 286 points and 304 points.
Ajit Mishra, VP - of Technical Research, Religare Broking said, the pressure was widespread wherein continuous decline in the banking heavyweights combined with a further dip in the IT and energy majors were largely weighing on the sentiment. In line with the trend, the broader indices too shed over a percent each.
In terms of sectoral indices, BSE Bankex became the top loser compared to its counterparts with a drop of nearly 746 points or 1.62%. Bank Nifty, meanwhile, contracted by nearly 678 points or 1.67%.
Among other sectoral indices, on BSE, the IT index shed 349 points, and Metal was down by 338 points. Auto and Consumer durables also slipped by 339 points and 382 points respectively. Capital Goods was lower by 426 points. Financial Services and Energy indices were down 1.7% and 1.5%.
Shrikant Chouhan, Head of Equity Research (Retail), Kotak Securities said, "Overnight slump in the US markets shook the Indian stocks badly as heavy selling across the board saw Sensex crash nearly 1,000 points and plunge below the crucial 60,000 mark. Markets were already range-bound with a negative bias in the last few sessions and today's sharp fall could further accentuate the pressing concerns of rising interest rates going ahead, higher inflation, and slowing global growth."
But Vinod Nair, Head of Research at Geojit Financial Services also pointed out that the resurgence of a cold war between the US & Russia has brought apprehension in the market. Although it should be a short-term effect, the fear of sanctions against Russia and its degree of implication on the economy, especially on food and oil exports, is adding to the anxiety.
Nair added, "the market is just recovering from the pandemic, and high interest & inflation are the headwinds in the background. It is presumed that this war will be fought on an economic front, limiting its effect on strong economies like the US & India. Awaiting the release of Fed and RBI minutes are the other major elements that kept investors on the sidelines."
At the interbank forex market, the Indian rupee ended at 82.85 per dollar --- slightly lower from the previous day's print of 82.79.
On the Indian rupee, Dilip Parmar, Research Analyst, HDFC Securities said, the Indian rupee was the median performer among Asian currencies amid suspected central bank dollar supply in the OTC market. However, the direction for the rupee remained down on the back of a stronger greenback of FOMC meeting minutes.
Going ahead, Chouhan added, "technically, the Nifty has formed a long bearish candle on daily charts and lower top formation on intraday charts, which indicate further weakness from the current levels. However, since the market is in an oversold zone, we could see a sharp pullback rally, if the index trades above 17600. For the traders now 17600 would be the key level to watch out for and above the same the pullback move will continue till 17700-17750. On the flip side, below 17600 the index could slip to 17500-17475. Contra traders can take a long vet near 17475 with a strict support loss at 17440."
Mishra added, "indications are pointing towards the same tone to continue, with the next major support around the 17250-17400 zone. In case of any rebound, the 17700-17900 zone would act as a strong hurdle. Traders should continue with a “sell on rise" approach and limit positions."
On Bank Nifty, Kunal Shah, Senior Technical & Derivative Analyst at LKP Securities said, "the Bank Nifty index continued to witness selling pressure from the higher levels. The index is now trading in an oversold territory and if it sustains above 40000 can witness a pullback rally towards 40600/ 40800 levels."
Meanwhile, for the rupee, Parmar added, "ahead of the monthly expiry, we could see the rupee hold the 83 levels amid huge derivative positioning." In the near term, he sees a spot USDINR to trade between 82.50 to 83.
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