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Taking Stock | Market falls 1.5% on rate hike worries; more than 100 stocks hit 52-week low

More than 100 stocks, including Wipro, Zomato, Welspun India, Vivimed Labs, Spicejet PNB Housing Finance, Glenmark Pharmaceuticals, touched their 52-week low on the BSE.

May 06, 2022 / 04:46 PM IST

The Indian market fell 1.5 percent on May 6 amid weak global cues as investors remained worried on concerns over rising interest rates by global central banks which could hurt the global economic growth.

The market started the day on a weak note and remained under pressure throughout the session, but some buying in power stocks at lower levels helped it recover some intraday losses.

At close, the Sensex was down 866.65 points or 1.56% at 54,835.58, and the Nifty was down 271.40 points or 1.63% at 16,411.30.

For the week, BSE Sensex shed 2,225.29 points (3.89 percent) to close at 54,835.58, while the Nifty50 fell 691.25 points (4.04 percent) to end at 16,411.3 levels.

"A steep crash in the US stocks as the market evaluated the need for a higher rate hike to tame elevated inflation levels wounded global markets with heavy selling," said Vinod Nair, Head of Research at Geojit Financial Services.

Close

"The Bank of England while raising its interest rates, warned about a possible risk of recession, aggravating investor fears," the expert said.

"This period of volatility is the time for smart money to look for opportunities with buy-in-dip as the strategy with a focus on sectors that are expected to be least impacted by inflation & yield rise," Nair added.

Divi's Labs, Bajaj Finance, Shree Cements, UPL, and Tata Motors were among the top Nifty losers, while Hero MotoCorp, Tech Mahindra, Power Grid Corp, ITC, and ONGC were the top gainers.

IndexPricesChangeChange%
Sensex53,161.28433.30 +0.82%
Nifty 5015,832.05132.80 +0.85%
Nifty Bank33,811.25183.80 +0.55%
Nifty 50 15,832.05 132.80 (0.85%)
Mon, Jun 27, 2022
Biggest GainerPricesChangeChange%
Coal India182.055.50 +3.12%
Biggest LoserPricesChangeChange%
Apollo Hospital3,794.50-43.90 -1.14%
Best SectorPricesChangeChange%
Nifty IT28346.00568.20 +2.05%
Worst SectorPricesChangeChange%
Nifty Pharma12221.5043.10 +0.35%

Among sectors, Nifty IT, and metal indices shed 2 percent each, while auto, bank, and pharma indices each declined over 1 percent.

Stocks and sectors

The BSE metal and realty indices fell 3 percent each and the IT index was down 2 percent; however, the power index rose 0.5 percent.

Broader indices underperformed the benchmarks, with BSE midcap and smallcap indices falling 2 percent each.

A long build-up was seen in Hero MotoCorp, Tech Mahindra, and Shriram Transport Finance Corporation, while a short build-up was seen in Vedanta, Cholamandalam Investment and Finance Company, and Voltas.

More than 100 stocks, including Wipro, Zomato, Welspun India, Vivimed Labs, Spicejet PNB Housing Finance, and Glenmark Pharmaceuticals, touched their 52-week low on the BSE.

Among individual stocks, a volume spike of more than 200 percent was seen in Coforge, Astral and Hindustan Copper.

Outlook for May 9

Ajit Mishra, VP - Research, Religare Broking:

Markets resumed the corrective trend and lost nearly one and a half percent. Weak global cues triggered a gap-down start, followed by a range-bound session till the end.

The Nifty index finally ended with losses of 1.5% to close at 16,411 levels. Among the sectors, except Power, all the other indices ended with losses wherein Realty, Metal, and Consumer Durables were the top losers. The broader indices also lost in the range of 1.5%-2%.

Markets will react to Reliance numbers in early trade on Monday and then focus would shift to the global cues. The increasing fear of aggressive rate hikes from the US Fed has spooked investors across the globe, including India.

On the index front, the Nifty has tested the crucial support zone of 16,400 and indications are in the favour of prevailing decline to continue with some intermediate pause/rebound.

In case of any rebound, the 16,650-16,800 zone would act as a hurdle. Participants should align their positions accordingly and use rebound to create shorts.

Amol Athawale, Deputy Vice President - Technical Research, Kotak Securities:

Markets were in a southward direction right from the start of the trading session and selling intensified thereafter as rising crude oil prices reignited fears that inflation would pose a major challenge going ahead.

The market is in a dilemma that in a rising interest rate scenario, a more hawkish stance by the RBI going ahead could hurt growth. Technically, the Nifty is consistently trading below 200-day and 50-day SMA which is broadly negative.

In addition, on weekly charts, it has formed a long bearish candle, which supports further weakness from the current levels. On intraday charts, the index is consistently holding a lower top formation that also supports short-term weakness.

For the traders, 16,300 would be the key support level. However, a quick intraday pullback rally is not ruled out if the index succeeds to trade above 16,300. Above the same, the pullback rally could continue up to 16,550-16,700. Below 16,300, selling pressure is likely to intensify, and below the same, the Nifty could touch the level of 16,150-16,000.

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.
Rakesh Patil
first published: May 6, 2022 04:46 pm
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