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Taking Stock | Freaky Friday rocks Indian markets, indices plummet 2%

The BSE Sensex tanked more than 1,000 points while Nifty closed at 17,531.

September 16, 2022 / 04:23 PM IST

It was a freaky Friday for the Indian market as it tanked nearly two percent, tracking negative global cues. This was the third straight session of losses for the domestic equities.

At close, the 30-pack BSE Sensex tanked 1,093 points or 1.82 percent to 58,841 while the broader Nifty lost 346 points or 1.94 percent to end the day at 17,531. Nifty ended the week lower by 1.6 percent.

Equity markets the world over were shrouded in negativity after the world bank’s assessment that the world may be edging towards a global recession. The central banks across the world are simultaneously hiking interest rates to combat persistent inflation.

“With persistent bearish pressure from global stocks amid rising yields and dollar index, the domestic market surrendered to the global trend despite its strong decoupling scenario and encouraging macroeconomic data”, said Vinod Nair, Head of Research, Geojit Financial Services.

The US markets closed lower by around one percent on a choppy day yesterday as the expectation of more aggressive rate hikes and monetary tightening gathered pace. Some experts expect the Fed might take the interest rates beyond the 4 percent mark that was expected earlier. The Asian markets couldn’t be spared and ended lower while the European markets too witnessed a weak opening later in the afternoon.

Post the release of US inflation data, which showcased a MoM increase in inflation, the global market has been pricing in the likelihood of a more aggressive policy response from the Fed, added Nair.

The sentiments were further marred by the cut in India’s growth estimates by Fitch Ratings to 7 percent from the earlier forecast of 7.8 percent. Rising inflation and advances in commodity prices along with a decline in IT stocks further exacerbated the sentiments.

All sectoral indices were down more than one percent and as has been witnessed over the past week, the Nifty IT index continued to lose investor favour as it declined by a massive 3.71 percent today. The rate hike worries battered the Nifty Realty index which was the other biggest loser with a loss of 3.72 percent. The Nifty Auto was down 2.7 percent while the Nifty Metal and FMCG indexes slumped by close to 2 percent.

IndexPricesChangeChange%
Sensex62,293.6420.96 +0.03%
Nifty 5018,512.7528.65 +0.15%
Nifty Bank42,983.95-91.45 -0.21%
Nifty 50 18,512.75 28.65 (0.15%)
Fri, Nov 25, 2022
Biggest GainerPricesChangeChange%
HDFC Life586.6014.05 +2.45%
Biggest LoserPricesChangeChange%
Nestle19,529.35-206.10 -1.04%
Best SectorPricesChangeChange%
Nifty Midcap 10031587.70298.40 +0.95%
Worst SectorPricesChangeChange%
Nifty FMCG44102.60-139.20 -0.31%

Only IndusInd Bank and Cipla bucked the trend among Nifty stocks to inch higher by 2.6 and one percent, respectively.

UPL, Tata Consumer Products, Tech Mahindra, UltraTech Cement and Infosys were the top losers on the Nifty with losses ranging from 3.9 to 5.3 percent.

Stocks & sectors

On the BSE, BSE Realty was the top loser as it lost more than 3.5 percent today. BSE IT was down 3.4 percent while BSE Auto declined by 2.7 percent. BSE Industrials and Energy were the other major losers and tanked close to 2.5 percent.

The broader indices could not escape the mayhem and underperformed the benchmarks. The BSE Midcap ended lower by 2.85 percent and BSE Smallcap lost 2.38 percent during the day.

The India VIX, which indicates the degree of volatility traders expect over the next 30 days, rocketed by 7.7 percent from 18.4 to 19.8.

None of the stocks witnessed a long build-up today. However, short build-up was seen in Vedanta, MRF and Balkrishna Industries.

Among specific stocks, a volume spike of close to 2,000 percent was seen in Delta Corp while United Breweries and Lupin witnessed a volume spike of more than 250 percent.

Despite the widespread selling, there were more than 180 stocks that made new 52-week highs on the BSE and included the three Adani group stocks, Ambuja Cement, Ceat Ltd, Indian Hotels, Jai Corp and Westlife.

Outlook for September 19

Siddhartha Khemka, Head - Retail Research, Motilal Oswal Financial Services Ltd.

The index failed to sustain above key 17777 levels, indicating overall weakness in the market. India VIX spiked by 7.8% to near 20 levels, indicating increased volatility in the market. Going forward, we expect this trend to continue until the clarity emerges on the quantum of the rate hike being taken by US Fed in the MPC scheduled next week. Also ECB and BOE policy announcement is due next week which would add to the nervousness in the market.

Ajit Mishra, VP - Research, Religare Broking Ltd

Markets witnessed a sharp sell-off on the final day of the week and lost closer to 2%. The last two days of slide in the index have completely engulfed the gains of the previous week and a decline below 17,500 in Nifty may result in a further slide. We thus recommend maintaining a cautious stance and limiting positions. Among the sectoral pack, banking is still looking comparatively stronger so participants can continue with “buy on dips” in private banking names.

Rupak De, Senior Technical Analyst at LKP Securities

Nifty slipped below the falling trend line on the daily chart suggesting a waning bullishness. On the daily timeframe, the index has fallen below the near-term moving average, 20 EMA. The momentum oscillator is in bearish crossover and falling. The trend for the near term looks negative; immediate support is seen at 17500, below which the Nifty may fall towards 17350. On the higher end, resistance is visible at 17700.

Disclaimer: The views and investment tips of investment 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.
Gaurav Sharma
first published: Sep 16, 2022 04:06 pm