Sensex gives up 32,000 amid weak global cues, stimulus package

Indian markets wiped out May 13 gains after Finance Minister released the first tranche of the Rs 20 lakh crore stimulus package announced by the Prime Minister on Tuesday.

The S&P BSE Sensex plunged nearly 900 points to close below 32,000 while Nifty50 closed below 9,200 levels.

Let’s look at the final tally on D-Street – the S&P BSE Sensex fell 885 points to 31,122 while the Nifty50 closed 240 points lower at 9,142.

“Nifty50 not only erased all the ‘post-stimulus’ gains witnessed in Wednesday’s session but also appears to have registered an Island Reversal kind of bearish formation with a gap down opening,” Mazhar Mohammad, Chief Strategist – Technical Research & Trading Advisory, Chartviewindia.in said.

Global markets were under pressure amid reports of the reemergence of the second wave of coronavirus. The US Fed Chair Jerome Powell’s comments that the US economy may remain under pressure for a longer time due also affected investors’ sentiments.

“Sharp selling in the last session also indicates that the market is expecting some disappoint from finance minister second round of announcements post-market press conference,” Sumeet Bagadia, Executive Director at Choice Broking said.

“After declaring the Mega Rescue Package by PM Narendra Modi, the market couldn’t capitalise the momentum and started to fall from its recent high. At the present level, the index has strong resistance at 9,350 while downside good support comes at 9,100 levels,” he said.

Sectorally, some buying was seen in healthcare, FMCG, and capital goods stocks while selling was witnessed in IT, Energy, Finance, Metals, Bankex, and Public sector stocks.

Broader markets outperformed as the S&P BSE Midcap index was down 0.43 percent while the S&P BSE Smallcap index closed with losses of 0.63 percent.

Top Nifty gainers: UltraTech Cements, Hero MotoCorp, ZEE Entertainment, and Bharti Infratel.

Top Nifty losers: HDFC, Hindalco Industries, Infosys, and Tech Mahindra.

Stocks & Sectors:

Sectorally, the S&P BSE IT index was down 3.6 percent, followed by the S&P BSE Energy index which fell 3.4 percent, and the S&P BSE Finance index was down 3 percent.

Some buying was seen in the Healthcare, FMCG, and Capital Goods stocks.

Volume spike of more than 100 percent was seen in NTPC, Glenmark Pharma, Marico, Bharti Infratel, and Cadila Healthcare.

Long Buildup was seen in stocks like Bharti Infratel, Balkrishna Industries, Glenmark, and Tata Consumer.

Short Buildup was seen in stocks like Torrent Power, Shriram Transport, Escorts, Tata Steel, and Motherson Sumi.

Almost 40 stocks hit a fresh 52-week high. These include Alembic Pharma, Aarti Drugs, Ruchi Soya, IOL Chemicals, Titan Biotech, and ABB Power Products.

Stocks in news:

IT stocks dragged indices on Gartner prediction that IT spending will decline 8 percent. MindTree, Tech Mahindra, NIIT Tech, and Infosys were all down more than 5 percent each.

Godrej Consumer Products surged over 5 percent despite reporting earnings below expectations.

United Spirits gained 6 percent as most states are now allowing sale of liquor via home delivery.

Jubilant Life continued to gain after agreement with Gilead for COVID-19 drug.

Lupin advanced 3 percent after USFDA cleared its Vizag API Unit.

Dr Reddy’s Laboratories was down over a percent after the company received an Establishment Inspection Report (EIR) from US FDA for its formulations plant located in a Special Economic Zone at Srikakulam in Andhra Pradesh.

Syngene International share price was up over 5 percent after the company reported a 20 percent rise in its consolidated net profit to Rs 120 crore for the quarter ended March 31, 2020, driven by robust growth in its main divisions.

Technical View:

Nifty formed a long bearish candle on the daily charts. It registered an Island Reversal kind of bearish formation.

Ideally, such a price behaviour shall trigger a fresh leg of downswing by marking an interim top at the recent high of 9,584 levels, suggest experts.

Bulls may try to put up some fight around 9,000 levels but a close below this shall accentuate the selling pressure further, while upsides shall remain capped around 9,400 levels.

For time being, positional traders are advised to remain short on the market with a stop above 9,280 on a closing basis and look for a bigger target.

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