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Nifty falls for 5th day in a row: 5 factors that could be weighing on market

The Nifty50 maintained its crucial support of 11,614 (swing low of Budget Day), but closed below 200-day SMA placed at 11,685.

February 27, 2020 / 05:59 PM IST

Indian market fell for the fifth consecutive day in a row on Thursday tracking weak global cues. The S&P BSE Sensex plunged 400 points, but recouped more than half of losses to end off day's low.

The index was down 143.30 points at 39,745.66, while the Nifty50 got back above 11,600 levels, closing 45.20 points down at 11,633.30.

Sectorally, selling pressure was seen in banks, auto, metals and realty stocks.

We have collated a list of top five factors which could be weighing on markets:

Asian markets slide:

Tracking sell-off in the US market overnight, Asian markets extended losses amid rising fears of Caronavirus.

Rising fears of a pandemic, which US health authorities have warned is likely, had already wiped more than $3.6 trillion from global stock markets by Wednesday’s close, said a Reuters report.

Australia's S&P/ASX 200 dropped 0.75 percent at close. Japan's Nikkei fell 2.13 percent to its lowest since October.

US stock futures fell as much as 1 percent, while European stocks were down 2 percent at 17:48 hours IST.

Fresh Coronavirus cases unnerve investors:
Mainland China reported 433 new cases of coronavirus infections on Feb. 26, the National Health Commission said on Thursday, up from 406 on the previous day.

According to a Reuters report, the total number of confirmed cases on mainland China has now reached 78,497, the health authority said.

The number of new deaths stood at 29, the lowest daily rate since Jan. 28, and down from 52 on the previous day. The outbreak has now killed a total of 2,744 people, the report added.

Additionally, South Korea reported 334 new cases on Thursday, its largest daily rise since its first case was confirmed on January 20. China reported 433 new infections.

December Quarter GDP Data:
As per the latest report from SBI Ecowrap, India's GDP growth will remain flat at over six-year low of 4.5 percent in Q3 of FY19-20. It revised up its FY20-21 growth estimate to 4.7 percent from the earlier estimate of 4.6 percent because of the base effect triggered by a downward revision in the FY18-19 growth number by the government.

"We are however worried that the impact of coronavirus on India could now happen with a lag. The outbreak is now expected to cause a growth erosion of 100 bps in China alone. New hotspots have emerged in South Korea (977 cases) and in Italy (229 cases) and these will result in more quarantines, border closures and disruptions in economic relations," said the report.

The cost of death even though might be limited, the economic impact could be significantly large. Although number of cases of COVID-19 in India are less, the economic impact is expected to accrue from supply chain risk which may link up with exports as in pharmaceutical sectors.

February F&O Expiry:

Markets saw volatility on the day of expiry of February futures & options contracts as traders rolled over their positions from the near-month February series to March series 2020.

Technical View: Nifty breaks below 11600

The Nifty50 broke below 11,600 levels in intraday trade, but managed to defend the same and closed at 11,633.

The index maintained its crucial support of 11,614 (swing low of Budget Day), but closed below 200-day SMA placed at 11,685.

The Nifty50 formed a bearish candle, which resembles a Hammer kind of pattern on daily charts.

"Going forward, if Nifty sustains above 11,665, then we may see some pull-back move towards 11,777 and then 11,880 levels in coming days. However a failure move beyond 11,665 and a hold below 11,535 could result into extension in ongoing correction towards 11,430 then 11,333 levels," Chandan Taparia, Vice President | Analyst-Derivatives at Motilal Oswal Financial Services said.

Kshitij Anand
Kshitij Anand is the Editor Markets at Moneycontrol.