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BSE Sensex ended nearly 600 points lower at 39,922
BSE Sensex ended nearly 600 points lower at 39,922

Six triggers why Sensex slumped 600 points today

  • Europe’s race to contain the pandemic is raising alarm bells across financial markets
  • A break of 11650 for Nifty could trigger a fresh wave of shorts which could take the markets down to 11400-11450, say analysts

Indian shares ended sharply lower today amid a choppy session. Despite strong earnings performance by some domestic companies, weak global markets amid spiking COVID-19 cases worldwide and uncertainty over the US presidential election weighed on the market sentiment. Reversing early gains, the NSE Nifty 50 index closed down 1.34% at 11,729.6 while S&P BSE Sensex ended nearly 600 points lower at 39,922.46.

All Nifty sub-indexes closed in the red, led by banks and financial stocks falling 2.17% and 2.31%, respectively. ICICI Bank fell 3.1% while HDFC Ltd shed 3.5%. Drugmaker Dr Reddy's Labs slipped 3.22% after the company posted a fall in profit for the September quarter. Tata Motors ended 0.7% lower after rising as much as 5.6% earlier in the session, following a narrower-than-expected September quarter loss on Tuesday. Meanwhile, Bharti Airtel, which rose as much as 12.6% on a smaller September-quarter loss, finished 4.27% higher.

Here are key things to know about today's market performance:

1) "Shares around the world plunged on Wednesday as coronavirus infections grew rapidly in Europe and the United States, igniting fears of possible strict lockdown measures that could damage already fragile economic recoveries. The uncertainty surrounding the upcoming U.S. election also has market players hesitant to make big moves," said Deepak Jasani, Head of Retail Research, HDFC Securities.

2) Domestically, the market is watching the developments in the Bihar assembly election, said Vinod Nair, Head Of Research at Geojit Financial Services. "Indian markets had started the week on a strong note due to the announcement of overwhelming Q2 result and in anticipation of increased FII inflows due increase in India’s weightage in MSCI index. It was going to be difficult to maintain this trend since the global market was turning cautious due to rising Covid cases worldwide, uncertainties of the US election and stimulus. After the initial rush, we are falling in tandem with the weak global trend as the world’s economic recovery will slow down this quarter with implications on world equities."

3) "Nifty broke the levels of 11700 and briefly visited 11684 which is around the lower end of the range but we bounced back to close above 11700. These are crucial times for trading as a break of 11650 could trigger a fresh wave of shorts which could take the markets down to 11400-11450," said Manish Hathiramani, Proprietary Index Trader and Technical Analyst, Deen Dayal Investments.

4) "The scheduled derivative expiry of October month contracts will further add to the volatility. We reiterate our cautious view on markets and suggest continuing with stock specific trading approach," said Ajit Mishra, VP - Research, Religare Broking Ltd.

5) Europe’s race to contain the pandemic is raising alarm bells across financial markets. The Stoxx Europe 600 Index sank as much as 2.7% today, reaching the lowest level since May.

6) Today's selloff was sparked by news that German Chancellor Angela Merkel will propose closing closing bars, restaurants and leisure facilities for a month. France is also expected to announce new curbs after coronavirus deaths reached the highest since April.

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