Sensex plunges over 1,100 points, Nifty slips below 8,270; 5 factors that triggered selloff

A day after logging healthy gains, market benchmarks the Sensex and the Nifty were back in the negative territory on April 1, tracking weak global cues.

The 30-share Sensex cracked more than 1,100 points, while the Nifty50 fell below 8,270 in intraday trade.

At 1210 hours, the Sensex was trading 1063 points, or 3.61 percent, down at 8,405 and the Nifty was 298 points, or 3.46 percent, lower at 8,300. The BSE Midcap and Smallcap indices were better off than the benchmarks, down 1.97 percent and 0.73 percent, respectively.

All sectoral indices were in the red on BSE, with the BSE Bankex and Energy falling more than 4 percent each. The BSE Finance, FMCG, Basic Materials, IT, Telecom, Teck and Oil & Gas cracked 3 percent.

Here are the 5 factors that dragged the market down:

Rising coronavirus cases

The confirmed COVID-19 cases in India rose to 1,397 on April 1, the eighth day of the lockdown. The Health Ministry has said 35 people have died due to the virus.

Globally, the infections have risen to 8.6 lakh and at least 42,300 people have died so far. The United States, Italy and Spain have registered more deaths than China, where the outbreak started. The outbreak is having a major impact on the global economy and the stock market.

Weak global cues

Asian shares, European stock index futures and Wall Street futures fell as the pandemic and the prospect of a global recession hit investor confidence.

The selloff in Asian markets was triggered after Wall Street suffered strong losses.

As per a Reuters report, Wall Street tumbled on March 31, with the Dow registering its biggest quarterly fall since 1987 and the S&P 500 its steepest quarterly drop in a decade on growing evidence of the massive downturn the pandemic will bring.

Bank stocks plunge

Bank and financial heavyweights suffered strong losses, dragging the benchmark indices down. The Nifty Bank index cracked over 4 percent while the Nifty Financial Services index slipped 3 percent.

Investors are worried that the disruption in economic and business activities will add to banks’ bad loans and hit their earnings and margins significantly.

Auto numbers weigh heavy

Weak auto sales numbers for March further dented the sentiment. Maruti Suzuki’s sales fell 47 percent on a yearly basis, while Eicher Motors’ total VECV sales plunged 82.7 percent YoY. Ashok Leyland’s total sales tanked 90 percent YoY.

Technical factor

The Nifty had formed a small bullish candle on the daily charts on March 31, as the closing was higher than the opening point.

Experts said the consolidation would continue and if the index were to surpass 8,660 on closing, then there could be a sharp upside in the coming days.

“Despite almost recording a 4 percent up move, what the candle depicted is somewhat disappointing as it took the shape of a Hanging Man formation,” Mazhar Mohammad, Chief Strategist–Technical Research & Trading Advisory, Chartviewindia said.

It is critical for the Nifty to stay above 8,244 as a breach could resume the downswing with targets placed in the 8,100–7,900 zone, Mohammad said.

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