Rs 14 lakh cr M-cap eroded in a day; Sensex below 26,000

It was a fast and furious fall we witnessed on D-Street which pushed the S&P BSE Sensex below 26,000 while the Nifty50 plunged more than 1,000-points to break multiple support levels on its way down.

Investors lost nearly Rs 14 lakh cr in terms of market capitalisation. The average market capitalisation of the BSE-listed companies fell from Rs 116.09 lakh cr recorded on March 20 to Rs 102.13 lakh cr as on March 23.

Let’s look at the final tally on D-Street on March 23 – the S&P BSE Sensex dropped 3,934 points to record worst ever one-day decline in absolute terms. The index closed at 25,981.

The Nifty50 fell 12.7 percent to end at 7,634, down 1,135 points – its worst fall in absolute term. In terms of levels, the index hit a 4-year low. All 50 stocks ended the day in the red with Bajaj Finance, IndusInd Bank, Bajaj Finserv, and Axis Bank closing with cuts of over 20 percent each.

Sectorally, the selling pressure was seen in Bankex, Finance, Capital Goods, Auto, Energy, Consumer Discretionary, oil & gas, and Metal stocks. The Nifty Bank fell the most amongst the indices. It closed at 16,917, down 3399 points.

The Nifty Midcap index closed at a 6-year low, slides 1,671 points to 10,991.

The broader market fell in-line with benchmark indices – the S&P BSE Midcap index closed with losses of 12.83 percent, while the S&P BSE Smallcap index was down 12.27 percent.

Indian Volatility Index or India VIX at a 12-year. High volatility does not auger well for the bulls on D-Street.

What should investors do?

The Nifty50 index wiped out gains made on Friday, and witnessed a cut of more than 1000 points – its worst ever in absolute terms. The rupee also breached Rs 76/USD mark amid selling by foreign investors.

The Nifty50 which is trading at a 4-year low could see further selling pressure in the coming days, fear experts. The wider spread of Coronavirus cases in India and lockdown in major cities impacted sentiments.

Fears of lockdown which is threatening to impact the economic activity of the country as well as relentless selling by FIIs in an attempt to raise cash led to a sharp selloff on D-Street.

“The rising number of cases of Coronavirus has definitely impacted economic activity across the globe. On the domestic front as well increase in a number of cases has forced the government to lock down major cities impacting economic activity,” Ajit Mishra, VP – Research, Religare Broking Ltd told Moneycontrol.

“Going forward, we expect the markets would continue to remain volatile as an increase in the number of cases in India would lead to selling pressure. Meanwhile, market participants would pin their hopes on stimulus package from the government to reduce the economic impact of Coronavirus cases,” he said.

Technically, the one-day upside bounce of Friday has failed to hold the market sentiment and the Nifty closed near the low. The support of 7850 levels (swing low of Dec 2016) has been broken sharply on the downside which suggests more downside in the offing, suggest experts.

“So far we have seen one-day upside bounces have been negated in the subsequent sessions. This pattern could indicate the strength of downside momentum in the market,” Nagaraj Shetti – Technical Analyst, HDFC Securities told Moneycontrol.

“The near term trend of Nifty continues to be down. The next downside targets to be watched around 6825, which is an important bottom reversal of Feb 2016,” he said.

“All the critical supports are breached now Nifty may be initially heading towards 7341 levels which is 50% retracement level of the entire rally from the year 2008 lows of 2,252 – 12,430 levels,” Mazhar Mohammad, Chief Strategist – Technical Research & Trading Advisory, Chartviewindia.in.

Stocks & Sectors:

Sectorally, the Bankex was down 16.8 percent, followed by the Capital Goods Index that fell 14.94 percent, and the Auto index closed 13.35 percent lower.

Volume spike was seen in stocks like NMDC, JSW Steel, Cipla, GMR Infra, Bosch, and CESC.

Short Buildup was seen in stocks like IGL, Adani Ports, NMDC, Tech Mahindra, Axis Bank, Petronet LNG, Bharti Airtel, and CESC.

sectors new

Stocks in the news:

Reliance Industries & ICICI Bank end at 2-year lows, Axis Bank slips to a 6-yr low

IndusInd Bank falls 24% to close the session at an 8-year low

Bajaj Finance closes at a 16-month low, M&M at the lowest level in a decade

Technical Recommendations:

The Nifty50 formed a Long Black Day kind of candle on the daily charts

As all critical supports are breached now Nifty may be initially heading towards 7341 levels

Before 7300, the market has major support between 7500 and 7200 level.

Three levels: 7341, 7500-7583, 8159

Disclaimer: The views and investment tips expressed by investment experts on moneycontrol.com are his own and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.

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