Sensex ends 300 points down, Nifty below 11,500: key reasons for today’s fall

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Published: July 22, 2019 4:14:35 PM

The benchmark equity indices ended the day lower even as Sensex and Nifty closed at a two-month low, down for the third straight day.

HUL, Maruti Suzuki, Kotak Mahindra Bank, BSE Sensex, FPI, Reliance industries, DHFLSensex tanked 305.88 points to end at 38,031.13, while Nifty fell 82.10 points to 11,337.15.

The benchmark equity indices ended the day lower even as Sensex and Nifty closed at a two-month low, down for the third straight day. Sensex tanked 305.88 points to end at 38,031.13, while Nifty fell 82.10 points to 11,337.15. The selling in heavyweights including HDFC twins, ITC, Bajaj Finance keep the major indices under pressure as market breadth favoured declines.  The key laggards on the Nifty include Bajaj Finserv, HDFC, Kotak Mahindra Bank, HDFC Bank and Eicher Motors were among major losers on the Nifty, while gainers were Yes Bank, Vedanta, Hindalco Industries, Zee Entertainment and Indiabulls Housing.

“A crack in the HDFC twins, Bajaj Finance will seriously impact NAVs of mutual funds which might face a further cascading effect. The vicious circle is deepening and the necessity of liquidity will eventually lead to large liquidations even in frontline stocks. Investors should mentally be ready to see further cuts in their portfolio values until at least till Diwali. They are advised to wait and not do bottom fishing currently. Nifty50 can reach 10000 levels before Christmas this year,” Umesh Mehta, Head of Research, Samco Securities said.

Also read: Investments via P-notes decline to Rs 81,913 crore in June

The investors are expected to raise levels of cash in their portfolio by making sale of some of the leading financial stocks so that they can later reinvest in the muted stocks, he added.

“With Lack of any fresh positive domestic triggers and uncertain global cues, we maintain our cautious stance on the Indian equity markets. We expect stock specific volatility to remain high in the coming sessions, as the markets are likely to be driven by the on-going earnings season. We would advise following stock specific approach and keeping positions hedged,” Ajit Mishra Vice President, Research, Religare Broking said.

Technical analysis

Today’s fall was led by weak technicals that took over the moment the markets had breached its 100-DMA levels on a closing basis. The markets have got structurally and technically weak and technicals were primarily responsible for the continued downside, Milan Vaishnav, CMT, MSTA Consulting Technical Analyst, Gemstone Equity said.

“Having said this, going ahead, we can expect some technical pullback happening. The weekly options data shows that the  11300 strike has the highest Put OI built up and this may prevent NIFTY from going below 11300. Apart from this, the index is oversold again on the short-term charts and a couple of the leading indicators point towards from exhaustion in the selling. So, it is expected that the selling may get arrested and we witness some technical pullback in the markets going ahead,” he added.

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