Sensex slumps 1,450 points in 3 days. Market selloff explained in 10 points


Indian stock markets ended sharply lower today amid a volatile session as investors booked profits ahead of a market holiday and Union Budget, which will be presented on February 1. The blue-chip NSE Nifty 50 index fell 0.93% to 14,238 while the benchmark S&P BSE Sensex closed over 500 points lower at 48,347. The Sensex has now lost about 1450 points in just three sessions after hitting 50,000 level last week.

Here are 10 things to know about today’s market performance:

1) “Nifty has fallen for the third consecutive session. This has happened after about 4 months. Poor advance decline ratio hints at broader profit-taking. Pre-Budget nervousness has resulted in some unloading. Locking up of large sums in the recent IPOs have also led to this sell-off. 14123-14148 is the next support band for the Nifty,” said Deepak Jasani, Head of Retail Research, HDFC Securities.

2) Shares of Reliance Industries weighed on the main indexes after the conglomerate reported a decline in quarterly revenue at its oil-to-chemicals division. Reliance Industries ended the day 5.5% lower.

3) Grasim Industries ended the day 6% higher as the top percentage gainer on the Nifty after announcing on Friday that it would enter the paints business.

4) “Indian markets witnessed a highly volatile trade and closed in red due to weak global market and Indo-China border tension. The downside was equally contributed by all the sectors except pharma which traded in the green. Policy decisions of the US Fed meeting which will commence tomorrow will drive the global market in the coming days,” said Vinod Nair, Head of Research at Geojit Financial Services.

5) “We have seen Indian markets being highly volatile these days and this trend is expected to continue this week as we inch closer to the Union Budget,” he added.

6) The Nifty Pharma index ended the day 1.7% higher, led by gains in Aurobindo Pharma and Cipla, whose shares closed 8% and 3.5% higher. Shares of pharmaceutical companies were up after the government on Friday gave its nod to make 3 antibiotic products under a Production Linked Incentive (PLI) Scheme.

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7) “It’s a holiday-shortened week and we expect volatility to remain high ahead also due to the scheduled expiry of January month derivatives contracts. Besides, we’re seeing participants speculating on the probable announcements in the Union Budget, which is further adding to the volatility. Amid all, we reiterate our view that a decisive close below 14,200 in Nifty would derail the present momentum so participants should align their positions accordingly,” said Ajit Mishra, VP – Research, Religare Broking Ltd.

8) “The Nifty 50 index is heading for 14100/13900 levels, (BSE Sensex 48100/47500), if it breaks 14200 (BSE Sensex 48400) decisively. On the higher side 14350/49000 and 14500/49400 would be crucial levels to surpass and sustain,” said Shrikant Chouhan, Executive Vice President, Equity Technical Research at Kotak Securities.

9) “As the market is falling vertically, we are of the view that ahead of the budget we should look for adding strong stocks and selective stocks to our positional portfolio between 14100/13900 (48100/47500) levels,” he added.

10) Global markets were mixed today with investors expecting that Democratic lawmakers in the US will be able to push forward their sweeping stimulus package in the face of Republican pressure.

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