Market Wrap: Sensex, Nifty extend losses into second consecutive session; investors lose nearly ₹2 lakh crore in a day

The domestic market witnessed an all-round selloff on Friday causing the benchmark indices the Sensex and the Nifty to decline for the second consecutive session while investors directed their attention towards the Jackson Hole symposium in search of indications about the future direction of interest rates.

Media reports suggested the dollar held firm near an 11-week peak while the US Treasury yields stabilised below 14-year highs ahead of the US Federal Reserve Chair Jerome Powell's speech at Jackson Hole.

“Fed Chair Jerome Powell is scheduled to speak at 1405 GMT, while European Central Bank (ECB) President Christine Lagarde will be taking the stage at 1900 GMT and investors will be looking for clarity on whether more rate increases are in store and how long the Fed plans to hold rates high,” reported Reuters.

Powell expected to take into account the recent macroeconomic trends which show the US labour market remains tight and inflation still significantly above its 2 per cent target.

Reuters quoted that analysts at Bank of America believe markets may be ill-prepared for a hawkish message from Powell. They pointed out that the recent strong US economic data might make policymakers more worried about inflation rising again.

Read more: US Fed chair at Jackson Hole: What to expect from Jerome Powell's speech today?

Stock market today

Sensex opened 252 points lower at 65,000.67 against the previous close of 65,252.34 and remained in the red throughout the session, falling almost 520 points to the intraday low of 64,732.57. The Nifty50 hit the intraday low of 19,229.70.

Sensex closed with a loss of 366 points, or 0.56 per cent, at 64,886.51 while the Nifty50 closed the day at 19,265.80, down 121 points, or 0.62 per cent.

Mid and smallcap indices also suffered losses today. The BSE Midcap index ended with a loss of 0.85 per cent while the Smallcap index ended 0.24 per cent lower.

The overall market capitalisation of the firms listed on BSE fell to nearly ₹306.8 lakh crore from ₹308.7 lakh crore in the previous session, making investors poorer by nearly ₹1.9 lakh crore in a single day.

For the week, Sensex slipped by 0.10 per cent while the Nifty declined by 0.23 per cent. On the other hand, the BSE Midcap index rose 1.50 per cent while the Smallcap index jumped 2.19 per cent for the week.

Top Nifty gainers and losers today

In the Nifty50 pack, 40 stocks ended with losses. Shares of Bajaj Finserv (up 2.41 per cent), Asian Paints (up 0.94 per cent) and Bajaj Finance (up 0.67 per cent) ended as the top gainers in the index.

On the other hand, shares of Larsen & Toubro (down 2.09 per cent), Dr Reddy's Labs (down 2.07 per cent) and JSW Steel (down 2.02 per cent) ended as the top losers in the next.

Sectoral indices today

The market witnessed a widespread selloff and all key sectoral indices on the NSE ended with losses.

Nifty PSU Bank (down 1.51 per cent), Realty (down 1.31 per cent), Metal (down 1.26 per cent), Healthcare (down 1.22 per cent), Pharma (down 1.11 per cent) and FMCG (down 1.02 per cent) indices fell over a per cent each.

Nifty Bank index fell 0.59 per cent to close at 44,231.45.

Experts' views on markets

"Investor caution is evident globally, as concerns about potential rate hikes dominate the prevailing sentiment ahead of the Jackson Hole meeting. Furthermore, the minutes from the RBI MPC meeting reiterated their dedication to managing inflation within the target range, given the elevated domestic inflation levels. However, the expectation of a rate hike remains subdued, as the current high inflation is perceived as transitory," said Vinod Nair, Head of Research at Geojit Financial Services.

"There is already a great degree of pessimism with regards to slowing global growth due to rising inflation and higher interest rate scenario, and investors taking no chance further resorted to profit taking ahead of the Federal Reserve Chairman Jereme Powell’s speech at Jackson Hole symposium. There are fears that the Fed chairman in his speech could highlight worries about rising inflation, and why further rate hike is necessary to bring down the inflation levels," said Amol Athawale, Vice President of Technical Research at Kotak Securities.

Technical views on Nifty

Rupak De, Senior Technical analyst at LKP Securities observed that the Nifty index has declined to a significant moving average (55EMA) support level.

"The sentiment is expected to stay bearish as long as the index remains below 19,450, where the 21-day exponential moving average (EMA) is positioned on the daily timeframe. If the index decisively falls below 19,240, it could potentially lead the Nifty towards the 19,000 mark," said De.

Jatin Gedia, Technical Research Analyst at Sharekhan by BNP Paribas said Nifty has reached the 38.2 per cent Fibonacci retracement level of 19,245 of the rise from 16,828 – 19,992 which makes it a crucial level to watch out for.

"On the weekly charts, Nifty has closed negative for the fifth consecutive week which also indicates there is a lack of buying interest. Weekly, daily, and hourly momentum indicators have a negative crossover which is a sell signal. Thus, both price and momentum indicators suggest a continuation of the fall. Overall, we shall continue to maintain our negative outlook on the index for a target of 19,100. Crucial support is placed at 19,200 – 19,180 while immediate hurdle is placed at 19,360 – 19,400," said Gedia.

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