Nifty below 10,900, Sensex down over 900 pts; 5 factors weighing on market

Bears continued dominating the equity market as key equity indices Sensex and Nifty traded with deep cuts in morning trade on September 24.

Markets remained in the red from the get-go as sentiment remained fragile on concerns over rising COVID-19 cases and uncertainty over economic recovery.

Sensex plunged over 700 points while Nifty fell below 10,950 in the first one-and-a-half-hour of the session.

Around 14:33 hours, Sensex was 923 points, or 2.45 percent, down at 36,744.69 and Nifty was 268 points, or 2.41 percent, down at 10,863

Midcaps and smallcaps underperformed the benchmarks as the BSE Midcap and Smallcap indices were down over 2 percent each at the time of writing this copy.

Among the sectoral indices, Realty, Metal, Consumer Durables, Auto, Industrials and Basic Materials cracked over 2 percent each on the BSE.

Here are the 5 factors that fuelled the sell-off in the market:

Weak global cues

Indian markets traded in sync with global cues. Shanghai Composite Index and Kospi fell about 2 percent while Nikkei fell 1 percent.

Asian stocks opened lower on Thursday, tracking a sharply lower Wall Street session amid fresh concerns that the global economic recovery is running out of steam.

US stocks fell sharply after data showed business activity cooled off while uncertainty over fiscal stimulus raised concerns about the economy.

Surge in COVID cases

India has been consistently reporting the world’s highest daily COVID-19 infection cases.

So far, India has recorded 57,32,518 confirmed COVID-19 cases, including 91,149 deaths. Maharashtra, Andhra Pradesh and Tamil Nadu have reported the highest number of cases.

As per a report by Reuters, India’s coronavirus infections surged again on Wednesday, a day after falling to their lowest figure in almost a month.

Uncertainty over economic recovery

The uncertainty over economic recovery is weighing on investor sentiment. While many rating agencies have projected India’s growth to remain negative in FY21, the ambiguity over the extent of the fall is raising nervousness.

As per aBusiness Standard report, the finance ministry is not sure about its earlier estimates of a V-shaped economic recovery as people are spending less owing to extreme uncertainty induced by the pandemic.

F&O expiry

Today is the last day of the September series of futures and options contracts and the market is witnessing sector and stock-specific volatility due to rollover of positions.

Experts are of the view that Thursday could be a volatile day amid September F&O expiry, and in case the index gets support from the financial space then there could be a possibility of a further bounce towards 11,300-11,400 levels.

Technical factors

The Nifty index formed a Bearish Belt Hold candle in the previous session.

For Thursday, crucial support is placed at 11,000-10,950, while resistance levels are placed in the range of 11250-11300 levels, suggest experts.

“On the higher side, 11,200 and 11,250 would be a major hurdle for the market. Recently, we saw a downtrend in the market mainly because of Financials. In case financial stocks start bouncing then the Nifty could even cross the level of 11300 and may rally to 11,450/11,500 levels,” Shrikant Chouhan, Executive Vice President, Equity Technical Research at Kotak Securities told Moneycontrol.

“On Thursday, one needs to keep a close watch on the Bank Nifty as it has formed a perfect bullish hammer pattern after hitting the oversold level and it could turn the sentiment bullish above the level of 21500,” he said.

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