Supports getting violated by bad global headwinds

By Udayan Mukherjee, CNBC-TV18

It was a completely disastrous day for the market. If for the last couple of days, the Nifty has shown some resilience and attempt to stay above that 4,000, today, it has been completely dashed. This morning we started off with terrible cues from the Asian space. Most of the Asian markets were down 2.5-3% and in some cases 4% like Taiwan. We started with a big gap down of 350-400 points. From there, it looked like the market was trying to stabilise above the 3,900 mark. But as the day progressed, those attempts came to naught. We had a catastrophic fall after the Fitch currency downgrade came in.

Global things turned quite bad as well and we had a very, very big sell off. Sensex was 650-points down and finally closed at 12,670. Nifty was down 180 points all the way to 3,860. We have pretty much come back to the 3,850 level. This is a 15-month low in terms of a closing for the market. There were not too many places to hide.

Banks got hit the hardest after that currency downgrade. We saw ICICI Bank, and HDFC Bank losing 8-10% apiece, as the Nifty bank index was down very sharply, nearly 8%. All the familiar sectors- the rate sensitives - whether it was capital goods led by the BHELs, GMRs, JP Associates and Punj Lloyds of the world, the real estate space led by Unitech and DLF and with all the other midcaps in tow and the metals space as well. Metals, which have been performing well for the last couple of days, today got hammered once again led by Hindalco and SAIL, Tata Steel, and Sterlite. All those stocks came off very sharply.

Even telecom had a very bad session. The breadth was terrible, as you would expect on a day as bad as this: one advancing stock to seven declining stocks. That is terrible and volumes actually picked up a little bit as the market sold off. The total turnover was about 10% higher than yesterday.

In the non-index space, there were terrible performances from the financials, whether it is IDFC or Reliance Capital. Some of the popular trading stocks like Chambal Fertilisers and Nagarjuna Fertilisers had very bad cuts out there. So, there were not too many places that you can find any kind of comfort from today.

It has been one of those bad days of trade, which has taken us below 12,800, the last support for the Sensex and to the brink of 3,850 on the Nifty as well.

So, those supports are not holding any more. They are getting violated with some really bad headwinds from the global markets this time around.