Nifty, Sensex plunge over 3% amid global sell-off; VIX soars to 9-year high

European stock markets tumble at open

Benchmark indices Nifty and Sensex extended losses on the bourses on August 5 after weak global cues and US recessionary fears dented sentiment across sectors.

At about 1 pm, the Sensex was down 3.17 percent at 78,415.52, and the Nifty tanked 3.13 percent at 23,943.50. About 388 shares advanced, 3,126 shares declined, and 83 shares unchanged.

US futures were deep in the red with Nasdaq futures down 5 percent while the Nasdaq entered the correction territory as the index is off 10 percent from all-time highs. In Asia, Japanese markets led losses as the Nikkei crashed a whopping 13 percent, its worst day since 1987. Meanwhile, the a circuit breaker was triggered for KOSPI after the benchmark plunged over 8 percent.

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"Over the last few months, we've observed a consistent upward movement in equity markets globally. It seems that the markets have now entered a corrective phase within this broader uptrend. Domestically, most major events are behind us, including elections, results, budget announcements, and even the Federal Reserve's policy decisions," Ruchit Jain, an analyst at 5paisa told Moneycontrol.

"At the 25,000 level, much of the positive news had already been priced into the market. Given some uncertainty and corrections in global markets, this presents a good opportunity for a correction," he added.

The broader market, mainly mid and small-cap indexes, fell more than the headline indexes. The two slipped 3 percent each. Jain said Valuations in the broader markets are definitely on the expensive side. This is evident as many fund managers in the mutual fund industry are holding more cash, indicating their reluctance to invest at current levels, he added.

India VIX, the barometer to assess market anxiety, skyrocketed 52 percent in a single day to 22. This is the highest it's been since August 2015.

Sectoral Trend

Among sectors, Nifty Auto, Realty, Metal and Public Sector Banks fell the most, plunging 3 percent each. The Nifty FMCG index was the sole gainer backed by gains in Hindustan Unilever, Tata Consumer Products, and Britannia Industries.

Technical View

"During the week, the Nifty gained strength, reaching the 25,000 zone and setting a new milestone. However, the index experienced significant profit-taking on the last trading session due to weak global cues, though the overall bias remains positive," Vaishali Parekh, senior vice president of technical research at Prabhudas Lilladher, said. For the week, support is projected at the 80,000 and 24,400 (Nifty & Sensex) levels, with resistance expected at 82,200 and 25,100 levels.

Key Nifty gainers

Hindustan Unilever (HUL), Tata Consumer Products, Sun Pharma, Nestle, and Britannia

Key Nifty losers

Tata Motors, ONGC, Hindalco, Infosys, and Maruti Suzuki

Key Sensex gainers

HUL, Nestle, Sun Pharma and Nestle

Key Sensex losers

Tata Motors, Maruti Suzuki, Tata Steel, Infosys, and Tech Mahindra

Stock Moves

Bharat Forge: Shares tanked 4 percent after Class-8 truck orders in North America dropped to a 15-month low in July. Class 8 truck orders in North America declined 5 percent on month in July, coming at 12,400 units. This also marks an 8 percent fall when compared to the same period last year.

Tamilnad Mercantile Bank: Shares traded 6 percent higher on August 5 as investors cheered the lender's fiscal first-quarter earnings. TMB recorded a 10 percent rise in its net profit at Rs 287.29 crore on account of rise in net interest income (NII). This marks the bank's highest net profit.

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