Wacky Wednesday! Nifty dragged by HRITHIK stocks

Well, after a terrible Tuesday we got a wacky Wednesday. Indian market fell for the sixth day in a row to hit a 2-month low largely weighed by global weakness and selling seen in HRITHIK stocks, suggest experts.

The S&P BSE Sensex plunged by nearly 500 points to close below 38,000 while the Nifty50 lost more than 130 points to breach 11,400 on the downside.

The average market capitalisation of BSE listed companies fell from Rs 149.15 lakh crore recorded on May 7 to Rs 147.43 lakh crore on May 8, which translates into a fall of Rs 1.72 lakh crore.

The final tally on D-Street – the S&P BSE Sensex plunged 487 points to 37,789 while the Nifty50 dropped 138 points to close at 11,359.

The fall in the index was led by selling seen in largecap names popularly known as HRITHIK stocks. HRITHIK stands for the seven blue chips – HDFC Bank, Reliance Industries, Infosys, TCS, HDFC, ITC, and Kotak Mahindra Bank. Presently these 7 stocks account for nearly 50 percent weightage in Nifty.

HDFC fell 1.8 percent, RIL dropped 3.2 percent, Infosys was down by 0.7 percent, TCS closed flat, HUL was down 0.52 percent, IndusInd Bank dropped 1.7 percent, and Kotak Mahindra Bank closed with a loss of 0.42 percent.

“It looks like the market is dancing to the tune of HRITHIK stocks or the top largecap names or the sectoral leaders, and all these stocks contributed significantly to the 10 percent rally in March where FII was positive,” Yogesh Mehta, Vice-president, Motilal Oswal Financial Services told .

“It looks like now these stocks have also started correcting due to US-China trade tensions which impacted sentiment globally. And, not to forget we have election outcome on May 23 so traders might be booking profits amid the uncertainty of the event,” he said.

In terms of technical, the index slipped below its crucial support at 50-days exponential moving average placed at 11,440 zone and now the next support is placed at 100-days EMA placed around 11,252.

The Supetrend indicators gave a sell signal on the daily charts which suggest that selling pressure is likely to continue. The last time when Supetrend indicator gave a sell signal was on February 15, and Nifty touched a low 10,585 before bouncing back.

In terms of sectors, the S&P BSE Energy index plunged 2.5 percent, followed by the S&P BSE Realty index which was down 2.1 percent, and the S&P BSE Power index plunged 1.6 percent.

Stocks in news:

Neogen Chemicals listed on the Indian bourses today at a stellar premium of 16.7% from the issue price. The stock didn’t stop there, it jumped over 22% and was locked in the upper circuit.

“This seems to be the IPO listing gaining frenzy, which will soon wither out as there is a lot of competition in the industry,” Umesh Mehta, Head of Research, Samco Securities told .

“The stock is fairly valued compared to the industry average and has no exceptional moat and therefore should be avoided,” he said.

ZEE Entertainment: The Subhash Chandra led Zee Entertainment Limited fell for the 5th day in a row as speculations are ripe that the stake sale process is undergoing some hindrance. The stock closed nearly 10% lower on the BSE.

Supreme Industries fell 2 percent as brokerages cut their earnings estimates after quarterly earnings which resulted into a cut in price target.

Escorts shares fell 3 percent as brokerages are mixed in their opinion with global brokerage house Credit Suisse slashing price target.

Shares of CG Power gained 7 percent after Yes Bank said it had acquired a stake worth nearly Rs 300 crore in the company.

Global Updates:

European indices are trading lower on May 8 on the back of rising fears of a breakdown of US-China trade talks.

Asian markets also ended lower amid ongoing developments in the US-China trade talks. Shanghai Composite was down 1.12% at 2,893.76 and Hang Seng shed around 1.23% at 29,003.20.

Kospi fell 0.41% at 2,168.01 and Nikkei declined 1.46% at 21,602.59.