Moneycontrol
Get App
Last Updated : Aug 13, 2019 05:01 PM IST | Source: Moneycontrol.com

Sensex breaches 37K, Nifty below 11,000; 4 factors weighing down markets

Both global and domestic factors left investors on the edge, with selling pressure at higher levels pushing benchmark indices below their crucial support levels.

Kshitij Anand @kshanand
Representative Image
Representative Image
 
 
live
  • bselive
  • nselive
Volume
Todays L/H
More

Bulls failed to hold on to the gains made last week, as bears dragged the BSE Sensex below 37,000 and the Nifty below 11,000 on August 13.

Both global and domestic factors left investors on the edge, with selling pressure at higher levels pushing benchmark indices below their crucial support levels.

The big bull of D-Street, Rakesh Jhunjhunwala, in an exclusive interview to CNBC-TV18 expressed concern over the state of the market and slowdown in the economy.

Close

The NBFC crisis, elections and fiscal situations had led to a short-term slowdown in the economy, Jhunjhunwala. He was not bearish on the market at current levels and saw 10,750-11,000 levels on the Nifty to act as the bottom.

The final tally on D-Street: the Sensex plunged 623 points to 36,958. The Nifty50 down 183 points at 10,925.

Sectorally, the Nifty Auto index was down 3.9 percent, followed by the Nifty Infrastructure index that plunged 3.6 percent, and the Nifty Financial Services slipped 2.9 percent.

Four factors that could be weighing on markets:

FM's silence on super-rich tax

Much of the last week’s gain, witnessed in the final two days, were attributed to the expectation that finance minister Nirmala Sitharaman would tweak the tax structure for foreign investors, a concern that has been roiling the market.

At a meeting with foreign portfolio investors on August 9, she gave no indication of rethinking the proposal to raise their taxes, a Reuters report quoted some of the investors as saying.

A day earlier, there were reports that the government could exempt foreign investors from the super-rich tax slapped on those earning more than Rs 2 crore a year.

The tax proposed in the budget, ratified by Parliament, saw investors pull $1.8 billion out of Indian equities in July alone.

Argentina crash

Asian markets were trading lower largely on concerns over a drawn out global trade war, protests in Hong Kong and a crash in Argentina’s peso currency.

Investors were also still assessing the wider damage caused by August 12’s crash in Argentina after its President Mauricio Macri became the latest pro-free market, pro-reform leader to be given a beating at the polls by a populist rival, a Reuters report said.

“The peso collapsed 15 percent, equities crumbled 48 percent in dollar terms —the second biggest one-day slump anywhere since 1950— and the bond market crashed, with a 100-year bond that investors had recently gobbled up tumbling 20% as fears of yet another government default spiked,” added the report.

Financials lead the decline

Nifty

The Nifty Bank tumbled more than 700 points, or over 2 percent, led by fall in YES Bank (down 10%) followed by Federal Bank (down 5%), RBL Bank (down 2.9%), IndusInd Bank, and SBI , both down by over 2 percent.

The Nifty Finance slipped 3 percent led by losses in M&M Financials (down 6%), followed by Bajaj Finance, Bajaj Finserv, HDFC, and ICICI Prudential which were down by over 5 percent each.

Technical factors

The Nifty, which that reclaimed 11,100 levels for the first time since July for the week ended August 9, breached 11,000 levels. The decline was fierce as the index breached 13-day exponential moving average (EMA), as well as 5-day EMA in a single trading session.

Last week, technical indicators were suggesting a short coverings rally in Indian markets towards 11,200-11,300 levels but the fierce fall on August 13 could make analysts revise calculations.

“If we manage to surpass 11,200-11,300 levels, then the next possible resistance is placed in the zone of 11,450 – 11,500. At this juncture, the pragmatic approach would be to take one step at a time and focus more on individual stocks,” Sameet Chavan, Chief Analyst, Technical & Derivatives, Angel Broking said.

“On the lower side, the immediate support is seen around 11,062–10,975 and with a broader view, as long as we are defending 10,782–10,750, there is no reason to worry for.”

Get access to India's fastest growing financial subscriptions service Moneycontrol Pro for as little as Rs 599 for first year. Use the code "GETPRO". Moneycontrol Pro offers you all the information you need for wealth creation including actionable investment ideas, independent research and insights & analysis For more information, check out the Moneycontrol website or mobile app.
First Published on Aug 13, 2019 04:17 pm
Loading...
Sections
Follow us on
Available On
PCI DSS Compliant