The S&P BSE Sensex recorded a gap down opening in opening trade on Friday largely weighed down by weak global cues which pushed the index towards 31,100. Tracking the weakness in markets, as more than 200 stocks hit fresh 52-week low on the BSE.
Stocks which slipped to fresh 52-week low on the BSE include names like Dr Reddy’s, Crisil, Amara Raja Batteries, SIS, Zensar Technologies, Orissa Mineral Development Company, SML Isuzu Ltd, PI Industries, Glenmark Pharma, Sun Pharma, Ipca Labs, Tata Motors, Coal India etc. among others.
The S&P BSE Sensex has already plunged over 1,400 points in a matter of days from its record high of 32,686.48 recorded just last month.
Indian market came under pressure this week on geopolitical concerns as a war of words between the US and North Korea continues to keep investors on tenterhooks. Back home, concerns over SEBI list of shell companies led to massive deleveraging in the small and midcap space.
“The July rally seen in Nifty was to a certain extent due to short covering. The recent Geo-political tension between the USA & N.Korea and that of India & China is leading to selling pressure in the market,” Rusmik Oza, Head – Midcaps, Kotak Securities told Moneycontrol.
The market lacks any positive trigger as most of them have played out, the last being the RBI rate cut. The majority of the mid & small caps earnings are below expectations, mainly due to the impact of GST implementation, suggest experts.
Oza further added with more than 20 percent correction in stocks prices margin calls get triggered leading to unwinding of position. To support loss making positions clients are forced to exit in stronger companies that lead to a cascading effect across the market.
The Nifty saw a gap down the opening of more than 100 points which took it closer to its crucial support level of 9710. Tracking the weakness in the market, over 190 stocks hit a fresh 52-week low on the NSE.
Stocks which slipped to fresh 52-week low include names like Blue Dart, Kewal Kiran, Dr. Reddy’s, Zensar Technologies, Crisil, TTK Healthcare, PI Industries, Glenmark Pharma, Wockhardt, Eris Lifesciences, Sun Pharma, Ipca Laboratories etc. among others.
The correction in the market was largely on expected lines because a lot of momentum indicators were giving signs of the market getting overheated. The ‘RSI’ oscillator has also turned southwards from its strong resistance of 76 – 80 zone on the weekly chart, which doesn’t bode well for the Bulls.
“At the current juncture, the index has strong support around 9710 levels, which is 61.80% retracement level of the recent rally on the daily chart,” Jay Purohit, Technical & Derivatives Analyst at Centrum Broking Limited told Moneycontrol.
“From the last couple of days, enormous profit booking was seen in many stocks and thus, traders are advised to be very cautious and need to be selective while picking a stock,” he said.Purohit further added that going forward, traders should not look for buying opportunities in the index as the ongoing corrective move may extend towards 9710 – 9650 levels. On the flip side, strong resistance for the index is placed at 9900 and 9990 levels, he said.