Sensex, Nifty snap 3-day winning run; Yes Bank, DHFL fall up to 7%

After three days of gains, Sensex ended in negative on August 20, dragged by losses in bank, financial and energy heavyweights, including Reliance Industries, ICICI Bank and HDFC.

After opening with gains, the market benchmark kept trading flat as investors kept awaiting government’s clarity on reports of a corporate tax rate cut. Besides, the government is yet to reveal its cards on widely anticipated fiscal stimulus measure which is keeping investors on tenterhooks.

“The market is awaiting a concrete move by the government on the front of economy. Also, there must be more clarity on the magnitude and timing of the reduction in tax rates,” said Pankaj Pandey, Head of Research at ICICI Securities.

The underlying current of the market remains negative on concerns over the deteriorating health of the economy and investors are pinning hopes on any stimulus or measures from the government to lift the sentiments.

Market experts advise to remain cautious and use this opportunity to hunt for quality stocks.

“We continue to remain cautious on the market in the near-term. We recommend investors should utilise the market correction to accumulate fundamentally strong stocks that are trading at attractive valuations,” said Ajit Mishra, Vice President – Research, Religare Broking.

A 74-point or 0.20 percent fall dragged Sensex to 37,328.01. Nifty ended the day with a loss of 37 points or 0.33 percent, at 11,017. Among the broader market indices, BSE Midcap and Smallcap indices suffered losses of 0.6 percent each.

The breadth of the market favoured decliners as the advance-decline ratio broadly appearing at 1:2.

Yes Bank (down 7.11 percent) ended the day as the top index loser, followed by IndusInd Bank (down 2.36 percent), ITC (down 2.01 percent), Axis Bank (down 1.64 percent) and ICICI Bank (down 1.48 percent).

On the other hand, Maruti Suzuki (up 3.75 percent), Tata Motors (up 2.53 percent), Infosys (up 1.94 percent), HCL Tech (up 1.87 percent) and Mahindra & Mahindra (up 1.56 percent) bucked the trend to settle as the top gainers in the Sensex kitty.

IT, auto and technology packs on BSE logged gains of over 1 percent, whereas indices of metals, realty, energy and basic materials declined over 1 percent.

Stocks in news

Sterling and Wilson Solar (SWSL) made a weak debut as it was listed at Rs 700 on the BSE, a 10.26 percent discount to its issue price of Rs 780. The stock settled with a loss of Rs 54.65 or 7.01 percent at Rs 725.35.

Yes Bank shares fell 7.11 percent to close at Rs 71.25 on BSE following worries over the valuation of stake in Gautam Thapar’s CG Power, which has been hit by allegations of financial irregularities.

Shares of CG Power and Industrial Solutions suffered a massive loss of 20 percent to end at Rs 14.75 after the company recognised irregularities in its financial statements.

Shares of Dewan Housing Finance Corporation (DHFL) plunged 5.20 percent to Rs 46.50, a day after the company said it defaulted on financial repayment obligations worth Rs 1,571 crore with regard to the issuance of bonds and commercial papers.

Shares of Vodafone Idea closed 2.50 percent lower at Rs 5.84 after the chief executive officer Balesh Sharma stepped down. The situation was worsened by additional loss of subscribers in June.

Shares of Himachal Futuristic Communication (HFCL) surged 5.31 percent to Rs 19.85 after the company received purchase order worth Rs 2,467 crore.

Global update

European shares followed their Asian counterparts higher on August 20 as investors bet possible monetary and fiscal stimulus measures would help stave off a major global economic downturn, Reuters reported.

Asian markets ended mixed with Nikkei rising 0.55 percent to 20,677.22. Kospi gained 1.05 percent to end at 1,960.25, while Hang Seng and Shanghai Composite ended marginally lower.

Technical view

Nifty witnessed sideways action. “The consolidation is part of a triangular pattern that can eventually break on the downside. The same is the case with Bank Nifty as well,” said Gaurav Ratnaparkhi, Senior Technical Analyst, Sharekhan by BNP Paribas.

The analyst said that the last push within the triangular pattern looks viable on the upside and to complete the same, Nifty can leap towards 11,100-11,120 in a day or two. Once that is done, the index will be poised for a larger decline, he added.

“In terms of the Elliott Wave structure the triangle is being formed as wave iv and the subsequent leg will be wave v of an impulse structure on the downside. Key targets for the same will be the recent low of 10,782 with potential to tumble towards 10,455, which is 78.6 percent retracement of the October–June rally,” said Ratnaparkhi.Subscribe to Moneycontrol Pro and gain access to curated markets data, trading recommendations, equity analysis, investment ideas, insights from market gurus and much more. Get Moneycontrol PRO for 1 year at price of 3 months at 289. Use code FREEDOM.