Nifty breaks below 200-DMA; Midcap [email protected] low

“A lot can happen over a coffee”, and also in a single trading session.

The Café Coffee Day tag line played out in the market on July 30, as in a single trading session Nifty broke below 200-day exponential moving average (DMA), a level last seen in March 2019 and Sensex below 37,400, a level last seen in May 2019. It all happened on a day when Café Coffee Day founder was reported missing.

That’s not all. The Nifty Midcap index closed 2 percent down, hitting its lowest level in 30 months. The Nifty Bank is set for the biggest monthly fall since September 2018, as it plunged 500 points in a day for the third time in July.

Coffee Day Enterprises was locked in the lower circuit, down by about 20 percent at Rs 154.05. Investors lost a little over Rs 800 crore in market cap, as the founder remained untraced.

In the last 90 minutes of the trade, the market did an about turn and slipped into the red after starting the day well in the green. The S&P BSE Sensex plunged nearly 300 points, while the Nifty50 lost over 100 points, to break below 200-DMA placed at 11,140.

The final tally on D-Street: the S&P BSE Sensex down 289 points at 37,397, while the Nifty50 closed 103 points lower at 11,085. India VIX rose 3.8 percent to 13.56.

The broader market indices ‘BSE Midcap and BSE Smallcap’, too, ended lower by 1.6 percent and 2.1 percent, respectively.

IT stood its ground to close in positive, while all other sectoral indices witnessed heavy selling pressure with auto, metals, oil & gas and banking leading the pack of losers.

A breakdown on charts for Nifty50 does not augur well for the bulls. “Nifty marked a gloomy day on the stock markets, with a key industrialist going missing and the stock of Coffee Day Enterprises hitting the lower circuit,” Umesh Mehta, Head of Research, Samco Securities, told Moneycontrol.

While the bourses started the day in green, mid-day the tables turned and heavy selling was witnessed in marquee names such as Reliance Industries, SBI which led the fall, he said.

Market breadth was in favour of declines. More than 500 stocks have hit a 52-week low on BSE including Coffee Day Enterprises, NBCC, Vodafone Idea, RBL Bank, NBCC, Bharat Forge, Tata Steel, TVS Motor, Tata Motors, Maruti Suzuki and Bajaj Corp.

The market is likely to tread with caution ahead of the US Fed policy outcome, which will be out Wednesday night (IST), US-China trade talks and auto sales numbers for July to be released on August 1.

“Broad-based selling dragged the indices to lower level as investors remain cautious ahead of US-China trade talks, Fed policy, US job data and a mixed bag of ongoing domestic corporate results,” Vinod Nair, head of research, Geojit Financial Services Ltd, told Moneycontrol.

“Liquidity constraints and sluggish outlook on auto sector indicate that consolidation may continue. Fall in 10-year bond yield in expectation of further 25bps rate cut by RBI may ease liquidity crunch to some extent,” he said.

Stocks in news

Shares of Coffee Day Enterprises shed 20 percent after founder Siddhartha was reported missing.

Hubtown shares fell more than 14 percent after a media report indicated that Income-Tax Department conducted a raid.

Shares of Shalby surged 7 percent after company reported robust numbers for the June quarter.

Bharti Airtel added more than 3 percent after research house Bank of America Merrill Lynch upgraded the stock to buy and also raised the target to Rs 400 from Rs 360 per share.

Shares of Strides Pharma Science rose 5.5 percent after the company reported a profit in the June quarter and entered into a joint venture with a Chinese firm.

Global update

Asian markets ended higher as the US-China trade talks resumed. The Nikkei 225 in Japan rose 0.43% to close at 21,709.31, Kospi rose 0.45% to close at 2,038.68 and Shanghai composite added 0.39% to close at 2,952.34.

European markets are trading lower on the expected interest rate cut from the US Federal Reserve.