Investors lost more than ₹4 crore lakh today as the Indian markets fell sharply. The increase in coronavirus cases at home and abroad affected investor confidence. The broader NSE Nifty 50 Index fell roughly 2.5% to 11,222, while the benchmark S&P BSE Sensex Index sank more than 800 points to 38,034. Global markets fell as some European countries such as Denmark, Greece and Spain imposed restrictions on activity due to the increase in COVID-19 cases, which threatened to halt the recovery.
The Nifty banking index, which tracks both state lenders and the private sector, fell for the third straight session to end 3.3% lower. Among Sensex stocks, IndusInd Bank was the biggest loser, plummeting more than 8%, while Maruti, M&M, ICICI Bank, Tata Steel and Bharti Airtel fell between 5% and 6%.
Analysts say global market sentiment took a hit as the resurgence of coronavirus infections in Europe dampened hopes for a rapid global economic recovery. The fading hopes of US fiscal stimulus hopes also weighed. Hong Kong-listed shares of Standard Chartered and HSBC fell today, following reports that they allegedly moved large sums of suspicious funds.
Here are some of the key triggers for today’s steep decline, according to analysts:
1) “Benchmark Indian equities ended the first day of the week with deep cuts, in line with soft global sentiments. Nifty fell almost one way after 12:15 pm after European markets open with deep cuts, “said Deepak Jasani. Head of Retail Research, HDFC Securities.
“Traders were quick to undo their long positions fearing further weakness. Volumes on the NSE were above the recent average.”
2) “Markets have broken support at 11300 on a closing basis and this is definitely an alarming situation. We could fall to levels at 10950-11000 as today’s drop has been fierce and supported by good volumes. Resistance at The upside is at 11550-11600. Until then, the markets look weak, “said Manish Hathiramani, technical analyst and property index trader at Deen Dayal Investments.
3) “We believe that the growing COVID-19 cases combined with the correction in the US markets spooked investors and could deteriorate further if Nifty falls below 11,200. The next major support would approach the zone of 10,800. As we are in the expiration week, traders need to be more cautious and we suggest preferring hedged positions. Investors, on the other hand, should seize this drop as an opportunity and gradually accumulate quality stocks, “said Ajit Mishra, Vice President of Research at Religare Broking.
4) “India’s benchmark indices succumbed to earnings reserve in the second half of the trading day and closed down more than 2%. It was in sync with global signals turning negative following a rise in stocks. infections in several countries, including Europe. Additional restrictions were being considered in Europe following a surge in infections. With high valuations and concerns that earnings do not justify such valuations in the short term, markets may trade uncertainly for the moment. Be cautious, “said Vinod Nair, director of research for Geojit Financial Services.
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