Franklin Templeton fund fiasco hits D-St; Sensex falls 500 points

Indian markets snapped their two-day winning streak on April 24 to close in the red on weak global cues and Franklin Templeton Mutual Fund’s shock decision to wind up six credit-risk schemes.

The assets under management (AUM) of these six schemes constitute less than 1.4 percent of the Indian Mutual Fund Industry’s aggregate AUM as on March 31, 2020.

The S&P BSE Sensex plunged more than 500 points towards the close while the Nifty broke below 9,200 levels.

“Market shaved off today as winding up of a few debt schemes by a large fund house in India added to the selling pressure witnessed in banks and NBFC stocks,” S Ranganathan, Head of Research at LKP Securities told Moneycontrol.

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“RIL and a few pharma names were the only saving grace in today’s trade. Investors should have a clear asset-allocation strategy to navigate the present volatility created by the pandemic.”

The final tally on D-Street: the Sensex fell 535 points to 31,327 while the Nifty closed 159 points lower at 9,154.

On the broader markets front, the S&P BSE Midcap index was down by 1.7 percent while the S&P BSE Smallcap index fell 1.4 percent.

Top Nifty gainers include Sun Pharma, Cipla, RIL, and Britannia Industries.

Top Nifty losers include Bajaj Finserv, ZEE Entertainment, Bharti Infratel, and Bajaj Finance.

Stocks & sectors

Sectorally, the S&P BSE Energy index was up 2.05 percent. The BSE Healthcare index rose 1.4 percent and the S&P BSE Capital Good index closed with 0.1 percent gain.

Selling pressure was seen in the S&P BSE Realty index that fell 4.1 percent. The S&P BSE Finance index was down 3.9 percent and the S&P BSE Bankex fell 3.3 percent.

A volume spike of more than 100 percent was seen in stocks like Shriram Transport, JSW Steel, Bharti Infratel, HCL Technologies and Tata Power.

Long Buildup was seen in stocks like Tata Chemicals, Britannia Industries and Marico.

Short Buildup was seen in stocks like Tata Power, Bajaj Finance, NALCO, LIC Housing Finance and JSW Steel.

Stocks in news

Bharti Infratel: The share price fell 8 percent after the company declared its March quarter numbers as global brokerages Credit Suisse, Jefferies, and Morgan Stanley initiated an underperform rating on the stock.

Alembic Pharmaceuticals: The stock jumped over 8 percent after the company reported a healthy growth in earnings for the March quarter. The drugmaker reported an 81.4 percent year-on-year (YoY) growth in Q4 profit at Rs 225 crore on a revenue of Rs 1,207 crore that grew by 30.2 percent.

Granules India: The share climbed 4 percent on the company getting USFDA approval for a drug for the treatment of overactive bladder.

Larsen & Toubro: The stock gained more than a percent after the company said that L&T Construction had bagged the Eastern Dedicated Freight Corridor Project contract.

Britannia Industries: The share was up over 3 percent after the company announced an interim dividend of Rs 35 per share for the financial year 2019-20.

Mahindra CIE: The stocks fell almost 5 percent after the auto component maker reported an 86.47 percent decline in consolidated profit at Rs 20.79 crore in the March quarter.

Technical View

The Nifty formed a Hanging Man formation on the weekly charts and a Grave Stone Doji on the daily charts.

The rally from the lows of 7,511 appears to have unfolded in the form of a raising Wedge, a bearish reversal formation.

A close below 13-DEMA placed at 9,045 will confirm a breakdown and the next target is placed around 8,450.

Positional traders can consider shorting the index below 9,045 levels and look for bigger targets. The index will now gain strength unless it registers a strong close above 9,300 levels, say experts.

On the monthly options front, maximum Call OI is at 9,500, and then 10,000 strike while maximum Put OI is at 9,000 then 8,000 strike.

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