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Last Updated : Feb 24, 2020 04:34 PM IST | Source: Moneycontrol.com

Sensex plunges 807 pts, Nifty sees biggest loss since Feb 1; 4 factors weighing on markets

Tracking weakness in global markets, Indian equity markets witnessed a kneejerk reaction that pushed the benchmark indices below crucial support levels.


Tracking weakness in global markets, Indian equity markets witnessed a kneejerk reaction that pushed the benchmark indices below crucial support levels.

Both equity benchmarks saw the biggest single day fall since February 1, 2020, the Budget day. The S&P BSE Sensex sank way below its crucial psychological support of 41,000, down 806.89 points to 40,363.23 while the Nifty dropped below 12,000 levels, down 251.50 points to 11,829.40.

Sectorally, the selling was seen across the board with Metal falling the most, down 5.4 percent. Pharma and Auto declined more than 3 percent.

We have listed top four factors that could be weighing on markets:

Close

Coronavirus spreads beyond China

Coronavirus that has already killed nearly 2,600 people in China is spreading in other countries. Neighbouring South Korea reported 161 more new cases on February 24, taking the nationwide total to 763, the highest number of infections in the world outside China, a PTI report said.

The number of coronavirus cases in Italy has jumped to more than 100, the president of the Lombardy region said on February 23, as northern towns struggled to contain rising infections.

The International Monetary Fund (IMF) has warned that the coronavirus epidemic could put an already fragile global economy recovery at risk.

Global growth was poised for a modest rebound to 3.3 percent this year, up from 2.9 percent last year, said a report.

Global selloff

The rising fears of Coronavirus spreading across geographies have invoked risk-off sentiment. Global shares slid as the spread of the flu-like virus outside China darkened the outlook for the world growth outlook.

In a sign of panic, European markets - France's CAC, Britain's FTSE and Germany's DAX - were down more than 3 percent, while Dow Jones futures with a loss of over 700 points indicated sharp fall in the US markets in opening later today.

Among Asian peers, South Korea's KOSPI index fell 3.87 percent, while China's Shanghai Composite was down 0.28 percent, Japan's Nikkei 0.4 percent and Hong Kong's Hang Seng 1.8 percent.

Rupee at Seven-Week Low

The Indian rupee weakened 23 paise to 71.88 per dollar today, the lowest level since January 6 this year, against the previous session’s close at 71.65. Last week, the rupee ended marginally lower at 71.65 on February 20 against the February 14 closing of 71.36.

The rupee suffered a fall, tracking weakness in other Asian peers while safe-haven gold surged as concerns mounted for world growth with coronavirus infections and deaths rising in South Korea, Italy, and West Asia.

Technical factors

The Nifty50 formed a bearish candle and slipped below its 5-Days EMA, and 100-DMA on daily charts.

Nifty closed below its 100-Days EMA placed at 11,938 but also registered a breakdown below the neckline of its Head & Shoulders formation, formed on a daily line chart.

In the next trading session if Nifty fails to hold the psychological support placed around 11,800 levels then this correction shall initially get extended into the bullish gap zone of 11,783 – 749 levels registered on February 4, suggest experts.

“If a fresh leg of downside is in progress from the recent highs of 12,246 levels, the index should go below 11,614 levels unless some sort of triangular consolidation is unfolding from the highs of 12,430 registered on January 20,” Mazhar Mohammad, Chief Strategist – Technical Research & Trading Advisory, Chartviewindia.in told Moneycontrol.

“For time being upsides shall remain capped around 12,000 levels. hence traders are advised to remain neutral even on the short side as Nifty is currently near its support,” he said.

Disclaimer: The views and investment tips expressed by experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.

 

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First Published on Feb 24, 2020 10:51 am
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