Bloodbath on D-Street, Nifty records biggest one-day fall in 19 months dragged by banks, financial services

The laggards on Wednesday include HDFC Bank, Tata Steel, Kotak Mahindra, Axis Bank, and Hindalco.

On Wednesday, the Indian equity markets continued the previous session’s bloodshed. The NSE Nifty 50 lost 460.35 points or 2.09% to settle at 21,571.95 points. While S&P BSE Sensex closed 1,628.01 points lower or 2.23% to settle at 71,500.76 points. Nifty Bank ended lower by 2,060.65 points or 4.28% to settle at 46,064.45 points.

The broader indices ended in negative territory, with largecap and midcap stocks leading the fall. On the sectoral front, IT stocks led the gains.

The laggards include HDFC Bank, Tata Steel, Kotak Mahindra, Hindalco, and Axis Bank. The Indian Volatility Index (India VIX) closed down by 11.13%.

“Pressure in the private banking majors post HDFC bank’s number combined with weak global cues was weighing on the sentiment. All key sectors, barring IT, surrendered to the fall wherein banking, metal, and auto were among the top losers. Surprisingly, the broader indices managed to outperform the benchmark and shed nearly a percent each,” said Ajit Mishra, senior vice president of technical research at Religare Broking.

“Nifty has engulfed the gains of the last four sessions but somehow managed to hold the support zone of the short-term moving average (20 EMA).  The close indicates more pain ahead and can gradually inch towards the 21,200-21,450 zone. We thus suggest reducing existing longs on the bounce and looking for shorting opportunities as well,” he added.

“On the daily charts, we can observe that the prices have witnessed a decisive break below the 20-day moving average (21629) which is a sign of weakness, The daily momentum indicator has triggered a negative crossover which is a sell signal. Thus, both price and momentum indicators are pointing toward weakness,” said Jatin Gedia, technical research analyst at Sharekhan by BNP Paribas.

“The ideal strategy to trade this fall would be sell on rise near the resistance zone (21800 – 21820). On the downside we expect the Nifty to target levels of 21167 which is the 40-day moving average and below that it can slip towards 20870 which is the 38.2% Fibonacci retracement level of the rise the Nifty has witnessed from 18837 – 22124,” Gedia said.

“Bank Nifty has led the fall today,” Gedia added. On account of the fall, the Nifty has decisively closed below the 40-day moving average (46887) which is a sign of weakness.

The daily momentum indicator has a sell signal. thus, price and momentum indicator suggests weakness from a short-term perspective. We expect the the Bank Nifty to drift towards, 45400 which coincides with the 20-week average, and the 50% Fibonacci retracement level of the rise from 42105 – 48636, said Gedia.

“Bank Nifty experienced a sharp decline on the back of a sell-off in the heavyweight HDFC Bank. The index sharply fell below the 38.20% Fibonacci Retracement level of the previous leg of the rally (from 43,230 to 48,347). Additionally, the index retreated within the area of the previous swing high after a consolidation breakdown on the daily chart. The sentiment may remain weak, with immediate support at 45,900-45,930. A drop below 45,900 could potentially initiate a further correction towards 45,500. On the upside, resistance is identified at 46,350,” said Rupak De, senior technical analyst at LKP Securities.

Sources: Financial Express


About The Author