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After the Bell: Pharma sell-off, global cues weigh on Sensex. What should investors do on Wednesday?

Nifty has to hold above 15750 zones to witness an up move towards 15900 and 15962 levels while on the downside support exists at 15700 and 15600 levels, suggest experts.

July 27, 2021 / 04:34 PM IST

Weak Asian cues and sell-off in the pharma stocks pushed Nifty50 below 15,800 levels, while the S&P BSE Sensex declined nearly 300 points.

Let’s look at the final tally on D-Street – the S&P BSE Sensex was down 273 points to 52,578 while the Nifty50 closed with losses of 78 points to 15,746.

Asian markets hit 2021 lows amid selling in Chinese internet giants, and real bond yields hit record lows ahead of a Federal Reserve policy meeting, said a Reuters report.

The Hong Kong benchmark fell 4.57%, its third day of declines, with the Hang Seng Tech index down 8.69% to its lowest since its inception in July 2020.

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"Domestic market skewed in favour of the bears, failing to hold onto its early gains due to weak global cues and selling in pharma stocks. Bleeding pharma companies pulled down the market due to a weak start to sector earnings season,” Vinod Nair, Head of Research at Geojit Financial Services, said.

“It created panic as the sector is priced with high expectations. Broadly, barring metals and consumer durables, all major sectors traded in negative territory. Following heavy selling in China and weakening Asian peers ahead of the crucial Fed Reserve policy meeting stated this week,” he said.

On the domestic front, the Nifty Pharma index plunged 4.3 percent, its worst fall since 21 December 2020 when the index fell 3.79 percent after Dr Reddy’s Laboratories reported a drop in the June quarter net profit.

IndexPricesChangeChange%
Sensex60,048.47163.11 +0.27%
Nifty 5017,853.2030.25 +0.17%
Nifty Bank37,830.3058.60 +0.16%
Nifty 50 17,853.20 30.25 (0.17%)
Fri, Sep 24, 2021
Biggest GainerPricesChangeChange%
Asian Paints3,448.60127.95 +3.85%
Biggest LoserPricesChangeChange%
Tata Steel1,272.10-46.60 -3.53%
Best SectorPricesChangeChange%
No Best Sector details available.
Worst SectorPricesChangeChange%
No Worst Sector details available.

The pharma major also said that it received a subpoena from American market regulator Securities and Exchange Commission (SEC) for production of documents concerning Commonwealth of Independent States (CIS) geographies.

The matter may result in government enforcement actions against the company in the US and foreign jurisdictions and could lead to civil and criminal sanctions under relevant laws, the company said in a statement.

Sectorally, selling pressure was seen in pharma, energy, private bank, realty and infrastructure while metal and PSU Banks saw buying interest.

On the broader markets – the S&P BSE Mid-cap index fell 0.6 percent, and the S&P BSE Small-cap index was down 0.1 percent.

Here’s what experts suggest investors should do on July 28:

Expert: Chandan Taparia, Vice President | Analyst-Derivatives, Motilal Oswal Financial Services


The Nifty50 continued to be in consolidation mode for the first few hours of the session but then witnessed a sharp selloff, falling below its previous day’s low and closed the day with losses of around 80 points. However, it witnessed some recovery in the last hour but it formed a Bearish candle on Daily scale and wiped out all the gains of the last three sessions. Now, the index has to hold above 15750 zones to witness an up move towards 15900 and 15962 levels while on the downside support exists at 15700 and 15600 levels.

 

Gaurav Ratnaparkhi, Head of Technical Research, Sharekhan by BNP Paribas

The Nifty started the day on a positive note however the bears maintained pressure on the higher side i.e. near 15900. As a result, the index moved down as the day progressed.

The Nifty50 continues to stay in the consolidation mode & is once again moving down to test the lower end of the consolidation.

On the downside, the junction of the 40 DEMA & the daily lower Bollinger Band, which is near 15650-15600 is there to offer support.

The index had seen a bounce from those levels in the last week & the same is expected this time as well. Hence, a dip towards 15650-15600 can be taken as a fresh buying opportunity from a short term trading perspective.

Ashis Biswas, Head of Technical Research at CapitalVia Global Research Limited.

The market witnessed a correction after a failed attempt to hold the support level around the Nifty50 Index level of 15800. On the downside, 15700 will be an important support level from a short-term perspective.

If the index sustains above 15680-15700 levels, we could see a bounce back, and trade in the range of 15680-15900. Technical indicator suggests a volatile movement in the market in the range of 15680-15900.

Sumeet Bagadia, Executive Director at Choice Broking

Technically, on the daily chart, the nifty50 index has formed a long bearish candlestick and closed below the prior two days of lows. However, there is good support at around 15650 levels, which is a 50-days SMA support.

Overall, the Nifty50 index is struggling in a range of 15700-15900 and either side breakout will decide the further direction. At present, Nifty is finding resistance around 15900 levels while on the downside; support is intact at 15600 levels.

Disclaimer: The views and investment tips expressed by experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.

Kshitij Anand is the Editor Markets at Moneycontrol.

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