Stay cautious, say market experts as Sensex sinks 550 points today

Indian stock markets fell sharply today, driven lower by a selloff in banking stocks. Investor sentiment was spooked by a spike in domestic coronavirus cases and fears of a second wave of infections in Beijing and parts of the US. The Sensex slumped over 550 points to finish at 33,228 while the broader Nifty 50 index ended down 1.6% at 9,813.

The number of COVID-19 cases in India has surged past 3.3 lakh and deaths are over 9,500, making it the world’s fourth-worst affected country. Fears of a second wave of infections pushed equity markets across the world lower. Dow futures were down over 500 points in recent trade while European markets were also lower today.

Reliance Industries or RIL shares hit a record high of ₹1,626, before settling 1.7% higher at ₹1615.

Nifty bank index fell 3.6% today to 19,912 with HDFC Bank, ICICI Bank and Axis Bank declining 3% to 4.5%.

Here is what analysts said on today’s market action:

Manish Hathiramani, , technical analyst at Deen Dayal Investments

“Nifty managed to respect the support of 9700 by bouncing from the intraday low of 9725. The Nifty has gone sideways now and will trade in a range between 9,700 and 9,950. If we go past 9950, we should target 10200 and if we break 9700, we should fall to 9550.”

Ajit Mishra, VP – Research, Religare Broking Ltd.

“After a smart recovery on Friday, the bears were back in charge and dominated the move till the end. The news of the second wave of the virus in other countries and rising cases in India were weighing on investors’ sentiment. However, the market breadth was almost flat, thanks to resilience in smallcap front.

“Considering the recent run up in benchmark indices, some consolidation cannot be ruled out in the near term as markets would await more data on how demand panning up post gradual re-opening of the economy. Going forward, due to lack of any major trigger except on-going earnings season, the markets would continue to take cues from global markets. Traders should prefer hedged bets and avoid overleveraging.”

Vinod Nair, Head of Research at Geojit Financial Services

“Indian markets opened the week on a negative note, in sync with the global markets, following a risk-off attitude amongst investors due to concerns regarding the spread of the virus in India and globally. The infections are still high in India while there seems to be a resurgence of virus cases in China and the US. FII net inflows into equity were also negative over the previous two trading sessions, which could be a signal of reduced risk appetite. Our advice to investors remains to be cautious and stock specific.”

Shrikant Chouhan, Executive Vice President, Equity Technical Research at Kotak Securities

“Indian markets closed lower on the back of growing pandemic concerns in the US and Beijing in China. Reliance Industries, HCL Tech and Sun Pharma helped the Nifty recover from lower levels. Bank Nifty remained in a depressed mood and closed at day’s lowest levels. However, we feel that the market was trading with caution due to steep weakness in US stock futures. In case, Nifty crosses 9,970 then it would result in short covering. On the other hand, if the index breaks 9700 level then it would result in a quick decline. The resistance exists at 10,070 and 10,150, while supports are at 9,700 and at 9,550.”

Vishal Wagh, Research Head, Bonanza Portfolio

Going forward, major resistance for Nifty is 10,040 and support is at 9,550. Bank Nifty will face resistance around 20,500 and support will be seen at 19,400 levels.”

Stay cautious, say market experts as Sensex sinks 550 points today via @MasterMindUpdate
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