The market went from new highs to a steep fall within hours, as the benchmarks wiped out the morning gains to close near the day’s low on December 20 on wide-spread selling.
At close, the Sensex was down 930.88 points, or 1.30 percent, at 70,506.31 and the Nifty was down 302.90 points, or 1.41 percent, at 21,150.20.
The market opened gap-up to climb to record highs in the first hour of the trade, with the Sensex touching 71,913.07 and the Nifty 21,593. A sudden drop in the mid-session erased all the gains, with the indices closing near the day’s lowest levels.
Stocks and sectors
The biggest Nifty losers included Adani Ports, Adani Enterprises, UPL, Tata Steel and Coal India, while the gainers were ONGC, Tata Consumer Products, Britannia Industries and HDFC Bank.
All the sectoral indices ended in the red. Auto, capital goods, metal, pharma, oil & gas, power and realty were down 2-4 percent.
BSE midcap and smallcap indices declined more than 3 percent each, after hitting fresh highs of 36,483.16 and 42,648.86, respectively.
A short build-up was seen in Indiabulls Housing Finance, REC and India Cements, while a long build-up was seen in Voltas, AU Small Finance Bank and ONGC.
Among individual stocks, a volume spike of more than 700 percent was seen in India Cements, Sun TV Network and Manappuram Finance.
More than 350 stocks touched their 52-week high on the BSE. These include Ajmera Realty, Aurobindo Pharma, Gallantt Ispat, Gujarat Fluorochemicals, Inox Wind, Kaynes Technology, MSTC, Navkar Corporation, Nippon, Oil India, ONGC, Repro India, Tamilnadu Petroproducts, Tata Coffee, Tata Consumer Products, Varun Beverages, Voltas. Click here for the full list
Outlook for December 20
Aditya Gaggar Director of Progressive Shares:
With full force, bears struck back and dominated the session. After registering another high of 21,593, the index was unable to hold higher levels and started to correct, which led to a bearish divergence in Relative Strength Index (RSI). Selling pressure intensified in the second half of the session and breached its near-term key support levels to end the session at 21,150.15.
With a strong bearish candle at record levels, it seems that the short-term trend turned in favour of bears but in the lower timeframe, there is a possibility of a hidden bullish divergence. If the index reverses from the support zone of 21,040- 21,080, we can expect a recovery, which will be restricted to 21,380.
Parth Nyati, founder, Tradingo
Euphoria turned into a gut punch, as the Nifty tumbled 500 points from its peak to finish over 300 points lower. While the reason for the sudden reversal remains unclear, several factors could be at play. The easy money sentiment buoyed by a buoyant primary market may have set the stage for a correction.
Tight liquidity among high net-worth individuals (HNIs) due to their involvement in the initial public offerings (IPOs)could have contributed to the selling pressure as well. The recent rise in COVID cases may also be serving as a convenient excuse for some investors to exit.
Technically, the Nifty is attempting to fill the gap formed around 21,000 following the Fed meeting. This zone between 21,000 and 20,950 is likely to act as strong support, with the 20-DMA at 20,700 offering further downside protection.
For long-term investors, this dip presents a potential buying opportunity, while traders should remain cautious and wait for a clear direction to emerge.
Rupak De, Senior Technical Analyst, LKP Securities
The Nifty experienced a sharp correction as bearish sentiment persisted. It failed to sustain above 21,500, resulting in increased call writing at the 21,500 strike.
At its lowest point, the Nifty dropped just below 21,100 before recovering to close above that level. There might be consolidation in the near term. Resistance is expected around 21,500, while support is at 21,100.
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