A terrible Tuesday for the markets. The S&P BSE Sensex crashed 1,053.10 points lower, down 1.47% to settle at 70,370.55 while the NSE Nifty 50 lost 333 points, down 1.54% to settle at 21,238.80 points.. The Nifty Bank lost 1,493.20 points or 3.11% to settle at 46,569.60 points.
On the sectoral front, media and ralty stocks were among the top losers. The broader indices too ended in the red, with midcap and smallcap stocks deep in the red.
The laggards include IndusInd Bank, Coal India, ONGC, Adani Ports, and SBI Life Insurance. The Indian Volatility Index (India VIX) closed 7.61% higher.
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The Asia market closed on a mixed note after the Bank of Japan kept its monetary policy unchanged. Japan’s Nikkei 225 closed tad lower at 36, 517.58.
“The Nifty opened gap up however it was unable to sustain and sold off. It closed in the red down 333 points. On the daily charts we can observe that the 21750 – 21810 zone acted as a stiff resistance and the Nifty started the next leg of the fall,” said Jatin Gedia, technical research analyst at Sharekhan by BNP Paribas.
“On the way down the Nifty is likely to drift lower towards 20870 which is the 38.2% Fibonacci retracement level of the rise from 18838 – 22124. Daily and hourly momentum indicators have a negative crossover which is a sell signal. In case of a bounce, it should be used as a selling opportunity. Overall, the trend continues to remain weak. In terms of levels, 20977 – 20950 is the immediate support while 21400 – 21430 shall act as an immediate hurdle from a short term perspective,” Gedia added.
Bank Nifty opened gap up however it was sold into and it resumed the next leg of the decline. On the downside, the bank Nifty is headed towards 44600 from a short term perspective. On the upside 45800 shall act as an immediate hurdle, Gedia added.
“Despite positive momentum in the global market, selling pressure continued today in the domestic markets mainly on the back of news that is worrying FIIs, as SEBI has drafted paper to impose tightened ultimate beneficial ownership norms for overseas investors with effect from February 1. This was despite pressure from foreign banks and few offshore fund managers to ease the rules ahead of the deadline. If this stands true domestic markets may see more selling in the range of Rs 1.5 lakh crore to Rs 2 lakh crore over the next six months by funds unable to comply with the norms,” said Prashanth Tapse, senior vice president of research at Mehta Equities.
“The recent selloffs in Indian markets have been triggered by heavy offloading by FIIs in the past few sessions and today’s slump could be due to mixed earnings outcome so far and higher valuation worries. There are indications that rate cuts in the US may not happen soon because of inflation playing truant there, and hence investors are getting uncomfortable with the current valuations. Although India’s growth prospects for the year appear positive, slowdown in China and other developing countries may lead to demand slowdown and push investors to curb their equity exposure going ahead,” said Tapse.
“The market witnessed a continuous decline today, abruptly turning negative despite a positive start, mainly due to substantial selling in heavyweight sectors, particularly finance. Mid and small caps witnessed more decline compared to the main indices. Selling by FIIs due to reasons like high valuation and mixed results for the earnings season so far, along with recent escalations in tensions in the Middle East and Red Sea, prompted the investors to book profit from the recent rally. Going forward, markets are likely to witness stock-specific actions during the ongoing earnings season,” said Vinod Nair, head of research at Geojit Financial Services.
“Nifty is likely to remain range bound with bias on the negative side until we see improvement in the banking pack. On the higher side, 21,850-22,000 would be tough to cross while the 21,000-21,200 zone will act as a cushion, in case the decline resumes,” said Ajit Mishra, senior vice president of technical research at Religare Broking.