Another 3-year low for Sensex, Nifty; what should investors do?

Bloodletting continued in the markets on March 18 as well, as benchmark indices hit a new three-year low, tracking a selloff in global equities. 

The BSE Sensex broke below 29,000, while the Nifty breached its Friday’s panic low of 8,555, suggesting that the selling pressure is unlikely to abate anytime soon.

Let’s look at the final tally on D-Street: The Sensex plunged 1,709 points to 28,869, while the Nifty dropped 498 points to close at 8,468.

Sectorally, selling pressure was seen in telecom, finance, banks, power, realty, auto and capital goods index. All the sectoral indices closed in the red.

On the broader markets front, the BSE Midcap index plunged 4.8 percent, while the S&P BSE Smallcap index was down 6.09 percent.

A massive selloff has been seen in the last 41 sessions. The Nifty has fallen from 12,430.50 to 8,541.50, a fall of 3,947 points.

The Nifty Bank ended at a three-year low and the Midcap index plunged to its lowest in four years.

A spike in coronavirus cases has fuelled fears of a recession, leading to panic in markets across the globe. 

Media reports said that at least three crucial policy initiatives in India are likely to put on hold in these times of economic uncertainty. S&P has also lowered India’s growth forecast to 5.2 percent. India has, so far, reported 147 coronavirus infections and three deaths.

“Indian markets ended at a three-year low, with the Nifty below the 8,500-mark, in tandem with the Asian and European markets after global agencies warned of a global recession following the impact of Covid-19,” said Vinod Nair, Head of Research at Geojit Financial Services.

“At the same time, rising infections in India and associated disruption in businesses led to India’s GDP growth forecasts also being downgraded. This will also affect the government’s fiscal math, which was already tight,” he said.

Banking stocks with exposure to the telecom sector were the worst hit after the Supreme Court turned down the government’s plea for relief to service providers on adjusted gross revenue (AGR) dues, he said.

What next for investors, traders?

The selling pressure from foreign institutional investors (FIIs) continued and more downside could be coming as the market slipped below the lows of March 13.

The next big support for the Nifty is placed at 8,400 and then below 7,945 is likely to act as a support. An immediate reversal is unlikely but a bounce back from here is highly probable. Long-term investors can consider accumulating gradually.

“The Nifty gave a breakdown from Rising Trendline and 100-EMA on the monthly chart, which opened the door for 7,900 and 7,500 levels,” said Chandan Taparia, VP Analyst-Derivatives, Motilal Oswal Financial Services Limited. 

“On the flipside, till the time the Nifty doesn’t close above 9,200 levels, the bears will have an upper hand and bounces shall be used as shorting opportunity.” 

Traders should not look for bottom fishing, as the market is in a strong bear grip and there are no signs of stability, Taparia said. 

Top Nifty losers include Bajaj Finserv, HDFC Bank, Power Grid, Bajaj Finance, Kotak Bank, Bharti Infratel and IndusInd Bank, which were down more than 10 percent each.

Top Nifty gainers include YES Bank, ONGC and ZEE Entertainment.

Stocks & Sectors

Sectorally, the S&P BSE Telecom index was down more than 9 percent, followed by the S&P BSE Finance index, which fell 7.6 percent and the S&P BSE Bankex that closed with losses of 6.99 percent.

Volume spike of 100-300% was seen in Bharti Airtel, NTPC, Idea Cellular, ONGC, Bandhan Bank, Shree Cements and Apollo Hospitals.

Long buildup was seen in stocks like ONGC, JustDial, BEL, and Cadila Healthcare.

Short buildup was seen in stocks like Shree Cement, Bandhan Bank, NTPC, and Titan Company, etc. 

More than 500 stocks on the BSE were locked in a lower circuit. These included Avenue Supermarts, Affle India, IRCTC, Quess Corp and Shankara Building.

More than 800 stocks on the BSE hit a fresh 52-week low. Among these were Bajaj Finserv, VST Industries, ICRA, TeamLease, HDFC Ltd, Bata India, Kotak Bank, NIIT Tech, and ICICI Lombard.

Stocks in news

IndusInd Bank: The stock plunged 23 percent intraday to hit a six-year low amid weak market conditions and no relief from the Supreme Court to telecom players in the AGR case.

Telecom stocks tumble: Stocks such as Vodafone Idea plunged over 32 percent after the Supreme Court refused relief to service providers on AGR dues.

YES Bank: The stock rose 5 percent on March 18, the day moratorium on the bank ends at 6 pm and all operations will resume as usual.

ONGC: The share price jumped more than 9 percent after the company declared a 100 percent interim dividend. The company also said it had sufficient funds to continue operations.

Technical View

The Nifty formed a bearish candle and recorded a fresh breakdown as the index was not able to hold Friday the 13th’s low of 8,555. It formed a Long Black Day candle on the daily charts.

No level seems to be sacrosanct enough to halt the selling pressure.

The Nifty needs to consolidate above 8,400 to prevent further damage, as a breach of this level will drag down the index into the 7,945 –7,893 zone, say experts.

On rallies, the 8,900–9,130 zone can act as an initial hurdle and unless this zone is cleared, upside strength should not be expected.

Three levels to track: 8,407, 9,127, 9,400

Max Call OI: 12,000, 10,000

Max Put OI: 8500, 9,000

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