Indian benchmark indices witnessed high volatility in intraday trade amid concerns over the likely government action as Covid-19 cases rose in Japan, China and the US. The BSE Sensex tanked more than 600 points, to close at 61,067. The NSE Nifty 50 index fell to just below 18,200, down 1.01%. Broader markets fell in trades as Nifty MidCap 100 settled 1.58% lower and Nifty SmallCap 100 lost 2.24% in trade today. Bank Nifty gave up the 43,000 mark, ending 1.7% down at 42,617.
Market behavior decoded
Healthcare sector in limelight today
“The Indian equity market witnessed a sharp fall in today’s trading session due to fresh Covid worries. Healthcare sector came into limelight while Covid averse sectors were under pain today. However, when Dow futures were trading higher today after yesterday’s gain, we overreacted. While institutional flows in the cash market are declining, F&O players are uneasy following today’s rise in the VIX”. – Santosh Meena, Head of Research, Swastika Investmart
“Benchmark Indices dropped yet again on the back of Covid scare in China and elsewhere, but today’s fall was more noticeable to participants since the red color on the screen engulfed all over barring Pathology Labs, Hospitals and select Pharma counters involved in Covid-related drugs. Barring Healthcare & IT, all other sectoral indices ended in the red. Benchmark indices lost over a percentage in afternoon trade despite opening in the green, even as developed markets continued to trade in the green.” – S Ranganathan, Head of Research, LKP Securities
Global factors concern traders
“Bears continued to cause havoc in the domestic market while Wall Street snapped its losing streak ahead of the release of the US GDP numbers. Though all other sectors bled, pharma stocks were on a high owing to renewed fears of a global Covid outbreak, and IT witnessed bargain buying. The market also anticipates the release of the RBI meeting minutes for more clarity on the central bank’s thought process.” – Vinod Nair, Head of Research, Geojit Financial Services.
“Indian markets underperformed their Asian peers and came down crumbling on broad-based sell-off, mainly over concerns that recessionary fears in key major economies will have a spill-over effect on the local growth prospects going ahead. Investors are also worried that mounting Covid cases in China may lead to further deterioration in global economic health prompting traders to cut their equity market exposure.” – Shrikant Chouhan, Head of Equity Research (Retail), Kotak Securities
Nifty Technical View: Reversal of upside trend likely below this level
“Technically, following a strong start, Nifty rejected the 9-DMA and saw a rapid decline; however, it was able to hold the 50-DMA of 18,144. On the downside, the area between 18,133 and 18,080 represents a significant demand zone. As long as Nifty trades above 18,080, the general bullish texture will hold, but below 18,080, we can anticipate a short-term trend reversal. The 20-DMA of 18,550 is a significant barrier on the upside, while 18,440 is an immediate barrier. To reverse the bearish scenario, Nifty needs to break through this level. Bulls will anticipate a short covering move since the put/call ratio is oversold.” – Santosh Meena, Head of Research, Swastika Investmart
“Technically, one more time the Nifty found resistance near 18,450 and corrected sharply, and also formed a long bearish candle on daily charts which is broadly negative. As long as the index trades below 18,350, the weak formation is likely to continue and below the same it could slip till 18,100-18,050. On the flip side, a fresh pullback rally is possible only after the dismissal of 18,350. Above which, the index could move up to 18,450-18,475.” – Shrikant Chouhan, Head of Equity Research (Retail), Kotak Securities
Bank Nifty Technical View: Weakness below this zone
“Bank Nifty has slipped below the 20-DMA, where 42,200-42,000 is an immediate and critical support zone; below this, we can expect any major weakness, otherwise it may bounce back again. On the upside, the 20-DMA of 43,300 will act as a hurdle now.” – Santosh Meena, Head of Research, Swastika Investmart.
