Massive sell-off drags Sensex, Nifty lower by almost 2%

Sensex and Nifty suffered losses for the third consecutive day on August 22 as across-the-board sell-off pushed them lower.

Ending at the lowest level since March 2019, the 30-share pack Sensex settled at 36,472.93, down 587 points, or 1.59 percent, with 26 stocks in the red. Nifty ended down 177.30 points or 1.62 percent at 10,741.40

“The fall is a result of growing uneasiness among the participants as they’re keenly awaiting some action from the government to boost the market sentiment. Besides, feeble global cues are further adding to the negativity,” said Ajit Mishra Vice President, Research, Religare Broking.

Investor sentiment was roiled after the Chief Economic Adviser (CEA) Krishnamurthy Subramanian indirectly ruled out the possibility of a major stimulus package when he said “have to be careful on the issue of a fiscal stimulus”.

Speaking at the Hero MindMine Summit 2019, Subramanian emphasised that the government is not expected to intervene every time when some sectors go through sunset phases.

Rupee’s multi-month low level against the dollar and an uptick in oil prices further weighed on the sentiment.

Among Sensex stocks, only Tech Mahindra (up 1.54 percent), Tata Consultancy Services (up 1.33 percent), Hindustan Unilever (up 1.03 percent) and HCL Technologies (up 0.58 percent) ended in the green.

BSE Midcap outperformed Sensex, closing 1.35 percent down. However, BSE Smallcap index underperformed the benchmark index and fell 2.19 percent.

Barring IT, all sectoral indices failed to perform positively, with BSE Realty plunging 6 percent. BSE Metal (down 3.49 percent), BSE Finance (down 2.69 percent), BSE Oil & Gas (down 2.63 percent), BSE Bankex (down 2.52 percent), BSE Energy (down 2.34 percent) and BSE Basic Materials (down 2.30 percent) lost big.

Stocks in news:

Extending their losing spree into the fourth successive session, shares of Yes Bank plunged 13.91 percent to Rs 56.30. In the last four sessions, the stock has come off 29.14 percent. The worries over the valuation of stake in Gautam Thapar’s CG Power, which has been hit by allegations of financial irregularities, has weighed on the stock.

IT stocks, Tech Mahindra, TCS and HCL Tech logged gains, gaining from the weakness of rupee. Rupee extended losses and ended at 71.81/$ .

Shares of Dewan Housing Finance Corporation (DHFL) fell 12.94 percent to Rs 39.70 as the lenders to the troubled NBFC are eyeing a 51 percent stake in the company by converting a part of debt into equity as a temporary measure if the consortium fails to find new investors.

Shares of Reliance Capital plunged 20 percent to hit a multi-year low of Rs 32 as it said it was exiting the mutual funds business. As per the share purchase agreement, Reliance Capital will completely exit in Reliance Nippon Life Asset Management, and Nippon’s shareholding in the asset management company will increase to 75 percent.

Shares of Coffee Day Enterprises closed 4.95 percent higher at Rs 76.40, extending the gains into the fourth successive session. In the last four sessions, the stock has climbed 21 percent. The company’s initiatives and policy of prioritising debt reduction seem to have boosted confidence among investors.

Global update:

Global markets flatlined as uncertainty over the outlook for US interest rate cuts following the release of minutes from the Federal Reserve’s last policy meeting kept investors on edge, Reuters reported.

The Chinese yuan’s slump to an 11-year low also sapped their appetite for risk, with dealers saying state-owned banks were seen selling dollars to support the yuan.

Hang Seng Index closed 0.84 percent lower, Kospi settled with a loss of 0.69 percent. Nikkei climbed 0.05 percent.

Technical view:

Nifty breached the August low of 10,782; thus confirming the fifth leg down as per the Elliott wave structure. The current leg of the fall that started this week is also showing impulse structure on the hourly chart.

“The subsequent crucial level on the downside will be 10,600, which is near the lower end of the consolidation that Nifty witnessed in Jan-Feb this year. The overall short term target on the downside is at 10,455, which is 78.6 percent retracement of the October-June rally,” said Gaurav Ratnaparkhi, Senior Technical Analyst, Sharekhan by BNP Paribas.Subscribe to Pro and gain access to curated markets data, trading recommendations, equity analysis, investment ideas, insights from market gurus and much more. Get PRO for 1 year at price of 3 months at 289. Use code FREEDOM.