Crash in oil prices, weak global cues send Sensex 1,011 pts down; check what caused sell-off on D-St

By: |
April 21, 2020 4:17 PM

The market is expecting a stimulus package from Government which might help the economy. Market breadth was in the favor of the bears

Sensex, NiftyMarch quarter earnings by the companies have also been impacted by the COVID-19 pandemic-led shutdowns

On the back of the crash in crude oil prices and negative global cues, Indian share market benchmarks BSE Sensex and Nifty 50 plunged in Tuesday’s trade. Further, the US President’s announcement on the temporary suspension of immigration into country led to a sell-off in IT stocks. “Buying interest seen near 8900 level which helped Nifty to give close above 8950. The market is expecting a stimulus package from Government which might help the economy. Market breadth was in the favor of the bears. For every gainer, there were more than couple of losers. Except for Pharma, none of the sectors managed to hold in green,” Vishal Wagh, Research Head, Bonanza Portfolio Ltd, said. Headline indices closed the session with over 3 per cent. Sensex ended 1,011 points at 30,636, while the broader Nifty 50 index settled at 8,981, down 280 points.

Bharti Airtel top Sensex gainer: Bharti Airtel, Hero MotoCorp, RIL and Nestle India were the only gainers on the Sensex. On the other hand, IndusInd Bank was the top Sensex loser, down 12.41 per cent, followed by Bajaj Finance, ICICI Bank and Axis Bank.

Nifty Pharma only sectoral gainer: Nifty Pharma was the only sectoral gainer today. Nifty Pharma index was up more than 2.5 per cent, led by gains in Aurobindo Pharma, Cadila Healthcare and Dr Reddy’s Laboratories. On the flip side, the Nifty Private Banks index was down nearly 6 per cent dragged by IndusInd Bank, Bandhan Bank and RBL Bank.

Coronavirus hit corporate earnings: March quarter earnings by the companies have also been impacted by the COVID-19 pandemic-led shutdowns. “Post earnings management guidance has also not given clear indication about the recovery path. Earnings results will be in focus for the future course of the company business,” Vinod Nair, Head of Research at Geojit Financial Services, said.

Technical Observation: The Nifty 50 index closed the session below 9,000-mark. “A small negative candle was formed on Tuesday with a sharp gap down opening. The opening downside gap remains unfilled. On the daily chart, Nifty has been moving in an ascending channel type pattern and is currently placed near the lower end of a channel around 8850-8800 levels. Hence, this lower area could now act as a key lower support for the Nifty in the short term,” technical analyst Nagaraj Shetti, HDFC Securities, said.

RBI may cut interest rates by 75 bps by Mar’21: Fitch Solutions on Tuesday said that the Reserve Bank of India (RBI) is expected to cut interest rates by 75 basis points by March 2021 as monetary easing measures till now are insufficient to lift the economy reeling under the stress of the COVID-19 pandemic.

Crude oil prices hit historic low: On the back of weak demand and lack of storage, Brent Crude futures slipped below $20 a barrel, a day after WTI Crude futures slipped below zero to negative $40.32 a barrel. “The selloff in May contract indicates that physical oil markets at Cushing are in bad shape and that storage is getting very full. The contract holders took the hit on the prices as taking delivery became costly. The negative prices indicate that the physical contract holders are ready to pay extra to take delivery off their hands,” Tapan Patel, Senior Analyst (Commodities), HDFC Securities, said.

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