BackSensex, Nifty suffer big fall. More weakness likely in near term, says analysts
Global markets were also weak today on flaring US-China tensions and persisting coronavirus fearsIndusind Bank and Axis Bank were the top percentage laggards on Nifty index
PremiumIndian stock markets fell sharply today amid rising coronavirus cases and fresh lockdowns in some parts in the country. The broader NSE Nifty 50 index closed down 1.81% at 10,607 while the benchmark S&P BSE Sensex ended 660 points lower at 36,033.06, dragged by losses in banking and auto stocks. The Nifty auto index closed down 2.38% at its lowest level since January 2019, after an industry body report said auto sales for June nearly halved from a year ago.
Global markets were also weak today on flaring US-China tensions and persisting coronavirus fears.
Private-sector lenders Indusind Bank and Axis Bank were the top percentage laggards on the domestic blue-chip Nifty index, shedding 5.5% and 5%, respectively.
Truck and motorcycle maker Eicher Motors dropped 4% and India's largest carmaker by market share Maruti Suzuki declined 3.6%.
"The India Volatility Index, often referred to as fear gauge, ended higher for the third straight day, ending 5.7% higher at 26.7. This was the biggest single-day gain for the Volatility Index in two months," said Deepak Jasani, Head Retail Research, HDFC Securities.
Some analysts expect markets to see more weakness in near term. "The Nifty broke the level of 10650 on a closing basis. This could result in some downward movement. We could expect 10480-10500 as the next level of support and thereafter 10,350. On the upside, in order to resume its uptrend, the markets would need to go past 10750 on a closing basis," Manish Hathiramani, Index Trader and Technical Analyst, Deen Dayal Investments.
Here is what analysts said on today’s market performance:
Deepak Jasani, Head Retail Research, HDFC Securities
"Volumes on the NSE were on the lower side with Banks, Metals and Auto stocks underperforming while Pharma stocks did well. Shares fell in Asia on Tuesday as skepticism set in about the recent upward momentum in global markets given rising confirmed coronavirus cases and tensions between the U.S. and China.
"Technically, Nifty has shown weakness after a long time. On downmoves, it could take support at 10484."
Ajit Mishra, VP - Research, Religare Broking Ltd
"Nifty finally ended the consolidation phase with a breakdown, citing subdued global markets, rising COVID-19 cases and higher than expected inflation numbers. We’re not surprised by the fall as markets were signaling exhaustion at the higher levels. Indications are in the favour of a further decline and Nifty could test 10,500 levels. Though the global markets are still buoyant, rising cases in India have raised fears of the imposition of lockdown in certain parts, which could dent the pace of recovery. We advise continuing with the stock-specific trading approach and accumulating defensive on dips."
Vinod Nair, Head of Research at Geojit Financial Services.
"The markets exhibited high correlation with the global markets and with the virus infections hitting day highs in India, the uncertainty caught up with the markets. Global markets were weak following rising infections in US and US-China tensions being back in the news. Indian markets were also worried about the increasing number of localized lockdowns which would in turn again slowdown the predicted recovery for businesses. Volatility is expected to remain and investors are advised to be cautious and be stock specific in their trades."
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