Indian stocks fell sharply today, ending their longest winning streak in nearly six years as investors posted gains in IT companies and bank stocks. The NSE Nifty 50 Index closed 2.4% lower to 11,680.35, while the S&P BSE Sensex fell more than 1,050 points to 39,728, eliminating the last six days of gains. Gains in banking and IT stocks this month helped Indian stocks rise for 10 straight sessions, ahead of today’s close.
The Nifty Bank index ended today down 3.4%, and lenders HDFC Bank and Kotak Mahindra Bank closed 3.5% and 3.4% lower. The index had gained 7.6% so far this month.
IT firms were among the top downsides to the top-of-the-line Nifty 50. The Nifty IT index finished 2.9% lower. Shares of Infosys Ltd closed down 2.5%, a day after it beat quarterly earnings estimates and raised revenue prospects on optimistic demand for its digital services.
“Markets witnessed a strong sell-off in today’s session after their global peers. Investor sentiments were greatly affected, as US fiscal stimulus could be delayed until the election. Furthermore, the second wave of Covid-19 infection led to a strict restriction and a blockade across Europe added to their concerns, “said Ajit Mishra, Vice President of Research at Religare Broking Ltd.
“We believe 11,600 would be the next critical support at Nifty. Considering the scenario, we suggest also holding short positions and limiting trades heavily to major indices. Additionally, participants should closely monitor global developments for signs. “.
Asian Paints Ltd. was the only Sensex member to post earnings for the day. On the other hand, the heavyweight market Reliance Industries fell 3.5%.
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Here’s what analysts had to say about the current market performance:
Vinod Nair, Head of Research at Geojit Financial Services
“The market had risen in anticipation of a great stimulus in the United States. At the same time, the pace of economic recovery is under pressure due to a resurgence of high rates of Covid infection, escalating to high economic restrictions. The margin of safety is low given premium prices and the slowdown in the economic recovery. The trend going forward will depend on the support measures announced in the context of the stimulus and comments on the second quarter results. “
Manish Hathiramani, Technical Analyst and Property Index Trader, Deen Dayal Investments
“The 11800 breakout proved to be quite severe in intensity as markets fell 150 points from that level. Traders are advised to remain cautious and not jump to long or short immediately. The medium term is at 11500.”
Deepak Jasani, Director of Retail Research, HDFC Securities.
“Volumes on the NSE were just above the recent average with all industry indices closing in the red. Weakness in the European markets led to a new selloff in our markets after 1300. European equities tumbled. today with investors concerned about the impact of a second wave of coronavirus on the economy with no imminent stimulus to cushion the blow.
Stagnant vaccine trials and Brexit clouds also played a role in weakening sentiment. The Nifty after so many attempts has failed to break above the January high of 12431. A large bearish candle at the top could lead to further weakness if Nifty does not stop falling within the next 1-2 days. If it falls, the Nifty could be supported in the band 11522-11605 “.
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