Here’s what led to 700-point drop in Sensex, Nifty ending below 10K

Weak global cues, the Supreme Court’s comments on  AGR dues and concerns over another lockdown extension spoiled the party for the bulls on D-Street on June 11, plunging the benchmark indices deep in the red.

The Sensex ended 708 points down at 33,538 while the Nifty50 slipped 214 points to 9,902, breaching its crucial support placed at 10,000 levels.

World shares took their biggest tumble in five weeks, as a sobering outlook from the US Federal Reserve challenged market optimism on the global economy, said a Reuters report.

“The markets traded negative today on the back of data emerging globally and domestically. The awaited FOMC announcement drove the negativity in the international markets as the Fed diminished hopes of a quick recovery in the US economy,” Vinod Nair, Head of Research at Geojit Financial Services, said.

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“Major global indices were mostly in the negative. With infections continuing to remain high, the markets are also worried about any additional lockdown measures being imposed.”

This could offset the optimism of the last two weeks, where investors were banking on the economy restarting fully, Nair added. Markets are in sync with global cues and with the Nifty closing below the 10,000-mark, investors are advised to be cautious.

Back home, telecom stocks were in focus after the Supreme Court adjourned to June 18 the hearing in the adjusted gross revenue (AGR) case. Analysts are of the view that telecom operators’ hopes of a relief on AGR have been dashed.

Sectorally, selling pressure was visible in telecom, metals, banks, the public sector and finance stocks. The NiftyBank fell 2.7 percent to close at 20,525.

On the broader markets were better off than the benchmarks. The S&P BSE Midcap index was down 1.4 percent while the S&P BSE Smallcap index fell 1.04 percent.

Top Nifty losers included Sun Pharma, SBI, ZEE Entertainment and Bharti Infratel.

Top Nifty gainers included M&M, Hero MotoCorp, and IndusInd Bank.

Stocks & Sectors

Sectorally, the S&P BSE Telecom index fell 4 percent followed by the S&P BSE Metal index, which was down 2.8 percent. Bankex fell 2.7 percent and the S&P BSE Public Sector was down 2.3 percent.

A volume spike of more than 100 percent was seen in stocks like Bata India, Sun TV, Adani Enterprises, GAIL India and Power Grid.

Long Buildup was seen in stocks like Shriram Transport, Cummins India, and Cadila Healthcare

Short Buildup was seen in stocks like GAIL India, Chola Finance, Bata India, and Eicher Motors.

More than 80 stocks bucked the trend to hit a fresh 52-week high. These included Muthoot Finance, Aurobindo Pharma, Cadila Healthcare, Dhanuka Agri, and Granules India.

Stocks in news

Hero MotoCorp stock was up almost a percent after CLSA increased FY21/22 EPS estimates by 9-10 percent. It has a buy rating on the stock, with a target of Rs 2,700 per share.

Ramco Systems surged 20 percent after Mumbai-based investor and trader Vijay Kedia picked up 1.1 percent stake in the company.

IndusInd Bank stock price was up over 4 percent, with experts attributing the rise to bottom-fishing along with technical factors.

Shares of telecom companies tumbled after the Supreme Court adjourned the hearing in the AGR case to June 18. Top losers included Vodafone Idea, which tumbled 13 percent followed by Bharti Infratel, HFCL, Tejas Networks, ITI and Bharti Airtel.

Banking stocks ended the session in the red, with PSU banks falling the most. Shares of SBI were down more than 5 percent followed by JK Bank, Bank of Baroda, Punjab National Bank, and Canara Bank. The problem of NPA is ailing banks even though the hope rally following the re-opening of the economy lifted these stocks.

Technical View

The Nifty formed a bearish candle on the daily charts after slipping below its 5-Days EMA placed at 10,010. The index ended below the support zone of 10,000.

If it continues to trade below the 10,000-mark, then it may see some cuts towards the immediate support zone of 9,800-9,700, say experts

On the upside, strong resistance is placed at the 10,000-10,100 zone.

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

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