Why Sensex fell over 1000 points today? Brutal selloff wipes out 6 days of gains
Asian Paints Ltd. was the only Sensex member to clock gains for the day. On the other hand, market heavyweight Reliance Industries dropped 3.5%.
PremiumIndian shares fell sharply today, ending their longest gaining streak in nearly six years, as investors booked profits in IT companies and bank stocks. The NSE Nifty 50 index closed down 2.4% at 11,680.35, while the S&P BSE Sensex fell over 1050 points to 39,728, wiping out past six days of gains. Gains in bank and IT stocks this month helped Indian equities rise for 10 straight sessions, prior to today's close.
The Nifty Bank index ended 3.4% lower today, with lenders HDFC Bank and Kotak Mahindra Bank closing 3.5% and 3.4% lower. The index had gained 7.6% so far this month.
IT firms were among the top drags on the blue-chip Nifty 50. The Nifty IT index ended 2.9% lower. Shares of Infosys Ltd ended 2.5% lower, a day after it beat quarterly profit estimates and raised revenue outlook on upbeat demand for its digital services.
"Markets witnessed a sharp sell-off in today’s session following global peers. Investors’ sentiments were largely impacted as US fiscal stimulus could get delayed until elections. Also, the second wave of Covid-19 infection led to strict restriction and lockdown globally majorly in Europe added to their worries," said Ajit Mishra, VP - Research, Religare Broking Ltd.
"We believe 11,600 would be the next critical support in Nifty. Considering the scenario, we suggest maintaining short positions also and limiting trades largely to the index majors. Besides, participants should keep a close watch on global developments for cues."
Asian Paints Ltd. was the only Sensex member to clock gains for the day. On the other hand, market heavyweight Reliance Industries dropped 3.5%.
Here is what analysts said on today's market performance:
Vinod Nair, Head of Research at Geojit Financial Services
"The market had moved up in expectation of a big US stimulus. At the same time, the pace of economic recovery is under stress because of a resurgence of high rates of Covid infection, mounting to high economic restrictions. The margin of safety is low given premium prices and slowdown in economic recovery. The trend going forward will depend on the supportive measures announced in context to stimulus and commentary of Q2 results."
Manish Hathiramani, Proprietary Index Trader and Technical Analyst, Deen Dayal Investments
"The break of 11800 proved to be quite severe in intensity as the markets dropped 150 points from that level. Traders are advised to maintain caution and not jump into long or short trades immediately. The resistance on the upside is at 12000 and the support for the medium term is at 11500."
Deepak Jasani, Head of Retail Research, HDFC Securities.
"Volumes on the NSE were just above the recent average with all sectoral indices closing in the red. Weakness in the European markets led to a fresh bout of selling in our markets post 1300 Hrs. European stocks slumped today with investors concerned about the impact of a second wave of coronavirus on the economy without any imminent stimulus to cushion the blow.
Stalled vaccine trials and Brexit clouds also played a part in the sentiments weakening. The Nifty after so many attempts has failed to go above the January high of 12431. A large bear candle at the top could result in more weakness if Nifty does not stop falling in the next 1-2 days. On falls the Nifty could take support in the 11522-11605 band."
"Exciting news! Mint is now on WhatsApp Channels 🚀 Subscribe today by clicking the link and stay updated with the latest financial insights!" Click here!
