Market Crash: Nearly 700 stocks hit lower circuit with close to 300 stocks at 52-week low

Market Nosedive

The market saw a severe crash on June 4 as bulls gave up full control to bears, after the lower-than-expected seats for the NDA government in the Lok Sabha election, unlike the exit polls which predicted a landslide win for NDA couple of days back. However, there was some recovery from day's low. Total 691 stocks hit lower circuit and 117 stocks at upper circuit, while 292 stocks touched 52-week low and 139 shares at 52-week high.

The market breadth was completely in favour of bears as 3,339 shares declined against 498 shares advancing on the BSE. In the previous session, when the market was up more than 3 percent, but the breadth was not very strong, it was just 1.5 shares gained against 1 share falling.

In fact, the fall was so drastic that the benchmark BSE Sensex has dropped below 200-day EMA (Exponential Moving Average) intraday before showing some recovery in later part of the day. The index tanked 4,390 points or 5.74 percent at 72,079, and the Nifty 50 plunged 1,379 points or 5.93 percent to 21,884.5.

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"The market, which had begun to price in a landslide victory for the NDA, is witnessing a significant correction due to margin calls, as retail investors were carrying heavily leveraged positions. Support seems to be very fragile," Rupak De, senior technical analyst at LKP Securities said.

The 1,800-point recovery on BSE Sensex from the day's low was supported by the hope of continuation of economic policies with the likelihood of NDA returning to power for third time.

"Despite fear selling, the market maintains its expectation of stability within the coalition, led by BJP as the major election winner, thereby mitigating substantial downside in the medium-term. This is likely to lead to a major shift in political policy with a focus on social economics, which will have a positive effect on the rural economy," Vinod Nair, Head of Research at Geojit Financial Services said.

Also read: Nervousness to linger in markets even if NDA forms govt, fiscal math a major focus: Shankar Sharma

Total 23 stocks from the A group hit lower circuit on Tuesday, including Bharat Bijlee, Inox Wind, Bharat Dynamics, Garden Reach Shipbuilders Engineers, NBCC, HCC, Reliance Infrastructure, and Techno Electric Engineering Company which locked in 10 percent lower circuit.

Further, Swan Energy, Genus Power, KPI Green, Wockhardt, One 97 Communications (Paytm), Sterling and Wilson Renewable Energy, Himadri Speciality Chemical, and Paisalo Digital dropped 5 percent each.

The health of broader markets was also weaker than the benchmarks. The BSE Midcap and Smallcap indices were down 7.8 percent and 6.7 percent, respectively.

Nearly 300 stocks plunged to a 52-week low on the election results. Of which, 75 stocks were from the A group including HDFC Life Insurance Company, IDFC First Bank, LTIMindtree, SBI Card, Tata Elxsi, India Cements, Anupam Rasayan India, Atul, Bajaj Electricals, Bajaj Finserv, Balaji Amines, Bandhan Bank, Bata India, Berger Paints, Can Fin Homes, Dalmia Bharat, Delta Corp, Devyani International, Dampur Sugar, Dreamfolks, EPL, GMM Pfaudler, Greaves Cotton, Indoco Remedies, JM Financial, MTAR Technologies, Navin Fluorine International, PVRInox, Ramco Cements, Shree Renuka Sugars, and Zee Entertainment Enterprises.

Meanwhile, investors saw their wealth eroding by around Rs 30 lakh crore, as the market capitalization of BSE listed companies slipped to Rs 395.99 lakh crore, from Rs 425.91 lakh crore in previous session. However, this was far higher than the gains as in previous session, the wealth was increased by Rs 14.18 lakh crore.

Further, the volatility jumped to 31.71 levels, before falling down to 26.75 at close (the highest level since March 2022), up 27.75 percent from previous close of 20.94 levels. As long as the volatility remains high, the bulls are expected to remain uncomfortable.

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