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Last Updated : Feb 10, 2020 04:11 PM IST | Source: Moneycontrol.com

Market continues to correct for 2nd straight day; 5 factors that are weighing

The Nifty50 continued to form bearish candle on daily charts for second consecutive day and it traded around crucial support level of 12,000.

The market continued to correct for second consecutive session on February 10 with the Sensex falling more than 150 points.

The Nifty50 has also broken its psychological 12,000 mark but managed to defend the same level on closing basis, down 66.90 points at 12,031.50, while the BSE Sensex was down 162.23 points at 40,979.62.

The broader markets also traded in line with benchmark indices as the BSE Midcap index declined 0.80 percent amid weak breadth. About three shares declined for every two shares rising on the BSE.

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Here are five factors that drag markets:

Coronavirus

China's novel coronavirus has not showing any sign of abating as the death toll on February 9 increased to over 900 and the infected cases have risen to more than 40,100 including news 3,062 infected cases and 97 additional deaths, mostly in Hubei province, the starting point for virus.

Globally all analysts and economists remained worried about the fast-spreading virus which forced world's largest consumer market and second largest economy China to shut down several manufacturing plants/units and even services. As a results, the country can't be in a position to export products to the world markets and even lot of countries suspended flights to and from China as the virus already spread to more than dozens of countries including Philippines, India, Thailand, Hong Kong etc.

Global Market Fall

The concerns over global growth due to many shut downs in China amid coronavirus crisis dented sentiment across global equities. Asian markets like Japan's Nikkei 225, Hong Kong's Hang Seng and South Korea's Kospi were down around half a percent each, while China's Shanghai Composite recovered to end 0.5 percent higher.

On Friday, US markets - Dow Jones Industrial Average was down nearly a percent, while Nasdaq Composite and S&P 500 fell 0.54 percent each.

Recently Goldman Sachs cuts its China's real GDP growth forecast for Q1CY20 to 4 percent from 5.6 percent earlier.

Also the American Chamber of Commerce in Shanghai on Friday said that out of 127 companies surveyed, 87 percent of respondents believe the coronavirus outbreak will have a direct impact on 2020 revenues, with nearly a quarter expecting a decline of at least 16 percent, reports CNBC.

If the virus crisis continues, then the countries which have large imports from China will get affected.

Delhi Exit Poll Outcome

After assembly elections in Delhi on February 8, exit poll predicted that Arvind Kejriwal-led Aam Aadmi Party (AAP) is likely to retain power in the national capital, which could be one of reasons for correction in the market.

India Today-Axis, Times Now-Ipsos, News X-POLSTRAT, India TV-Ipsos, NewsX-Neta, Republic - Jan Ki Baat, ABP-CVoter, TV9-Cicero and News24 - Jan Ki Baat expect the AAP to win in 44-68 constituencies, and the BJP likely winning range is 5-26.

For BJP, which campaigned a lot to get voting share of Delhi assembly, is the crucial state to win. If the exit poll results come true then there could also be a bit of correction or volatility on Tuesday, February 11, when the actual results will be announced.

All Sectoral Indices in Red

The selling was seen across sectors with Nifty Metal falling more than 3 percent due to demand worries amid China's coronavirus.

Nifty Auto was down more than 2.5 percent after SIAM data which said that domestic passenger vehicle sales declined 6.2 percent to 2,62,714 units in January YoY, two-wheeler sales down 16.06 percent to 13,41,005 units and commercial vehicles down 14.04 percent.

Among others, Bank, FMCG, IT and Pharma were down 0.2-1 percent.

Technical View

The Nifty50 continued to form bearish candle on daily charts for second consecutive day and managed to close above 12,000.

"As twin momentum oscillators also generated a sell signal, Nifty shall once again come under selling pressure if trades below 11,990 levels for atleast 30 minutes tomorrow," Mazhar Mohammad, Chief Strategist – Technical Research & Trading Advisory, Chartviewindia.in told Moneycontrol.

In such a scenario breach of 11,950 looks inevitable which shall then facilitate the downside target placed in the zone of 11,783–11,749 levels, he said.

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First Published on Feb 10, 2020 12:37 pm
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