The S&P BSE Sensex finally closed 424 points, or 1.1 percent, lower while the Nifty50 ended 125 points down at 10,943
Indian market remained under bear grip throughout the trading session on Friday and wiped out most of the gains made during the week. The S&P BSE Sensex finally closed 424 points, or 1.1 percent, lower while the Nifty50 ended 125 points down at 10,943.
The S&P BSE Sensex closed 0.2 percent higher for the week ended February 8.
In terms of sectors, metals, auto, PSU stocks led the decline while telecom and realty stocks bucked the trend.
“The major indexes, Nifty and Sensex, as well the sector indexes - auto, metals, banks and infra, remained in the red throughout the trading session today. The 1.15 % fall in the indexes follows a similar fall in all the major eastern markets," Dr. Joseph Thomas, Head Research, Emkay Wealth Management.
"It may be added that Europe also has slipped into losses mainly on sluggish economic outlook. Absence of fresh triggers , and the dismal results from Tata Motors, in conjunction with other auto results sullied the sentiments quite a bit," he said.
Here is a list of top 4 factors which might be weighing on D-Street:
Weak Global Cues
Global cues were not supporting from the word go. The SGX Nifty was down 20-30 points ahead of the market opening largely weighed down by concerns of a larger economic slowdown.
Adding to the gloomy mood, US President Donald Trump said he did not plan to meet with Chinese President Xi Jinping before a March 1 deadline to achieve a trade deal, said a Reuters report.
Remember, US President has vowed to increase US tariffs on $200 billion worth of Chinese imports to 25 percent from 10 percent currently if the two sides cannot reach a deal by 12:01 a.m. (0501 GMT) on March 2.
Most of the Asian markets closed in the red. Hong Kong’s Hang Seng lost 0.25 percent and South Korea’s KOSPI retreated 1.1 percent. Japan’s Nikkei tumbled about 2 percent.
Largecaps led the fall: Tata Motors hit 10-year low
Large-cap stocks led the fall on Sensex and Nifty. In terms of Sensex, Tata Motors fell 17 percent to hit a 10-year low but recovered later to end the day at 8-year high, followed by HDFC, L&T, Reliance Industries, ITC, and ICICI Bank.
Tata Motors Q3 operating results were below estimates driven by lower than expected margins at JLR. Weaker sales in China, de-stocking and warranty expenses have dented margins, commentary from experts suggested.
“The management has given weak demand outlook across geographies - China, UK and USA for JLR and India for domestic business. Also, JLR has cut EBIT margin guidance from 4%-7% in FY 20-21 to 3%-6% in FY20-FY22 and stated that JLR free cash flow will continue to be negative in FY2020,” said a Sharekhan report.
Most experts advise investors to remain cautious on the stock given weak results and weak management commentary and advise investors to avoid the counter and not to bottom-fish in the stock.
Reacting to the results, most brokerage firms reduced their earnings per share (EPS) estimate for Tata Motors and reduced their target price on the stock. CLSA, which retained sell rating on Tata Motors, has a target price of Rs 150 which translates into a downside of 17 percent from Thursday’s close.
Carnage in Small & Midcaps:
The S&P BSE Midcap index closed 1.4 percent lower while the S&P BSE Smallcap index was down by 0.9 percent.
More than 300 stocks on the BSE hit a fresh 52-week low which includes names like Tata Motors, Tata Motors (DVR), MRF, VST Tillers, Balkrishna Industries, IFB Industries and TTK Healthcare.
Profit-taking at higher levels
The Nifty50 corrected from an intraday high of 11,118 on Thursday. The index closed below 11000 levels suggesting weakness at higher levels. The Nifty index opened negative and witnessed sustain selling pressure till the end of session towards 10925 zones.
It wiped out most of its gain of the week and formed a High Wave candle with the long upper shadow which indicates that selling pressure is intensifying at higher zones.
“It has negated its formation of higher lows of last seven trading sessions and witnessed profit booking after the consecutive gains of last six trading sessions. It formed a Doji candle followed by a Bearish candle on a daily scale which suggests a short term pause in positive momentum as it failed to hold its gains even after its consolidation breakout above 10,985 zones,” Chandan Taparia, Associate Vice President, Analyst-Derivatives, Motilal Oswal Financial Services told Moneycontrol.“Now, the index has to again cross and hold above 10,985 zones to witness an up move towards 11,080 zones while on the downside support exists at 10,880 then 10,820 levels,” he said.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.