Extending the losing streak into the sixth consecutive session, market benchmarks the Sensex and the Nifty closed with cuts of over a percent each on January 29.
The market ended in the red even as the Economic Survey 2021 projected India on track for economic recovery.
The survey pegged India's Gross Domestic Product (GDP) growth at 11 percent in 2021-22. The Indian economy is forecast to contract 7.7 percent in 2020-21, the survey said. The survey has predicted a V-shaped economic recovery.
After opening in the green, equity barometer Sensex witnessed strong bouts of volatility and remained on a shaky pitch for the entire session.
Eventually, Sensex closed 589 points, or 1.26 percent, down at 46,285.77 while Nifty shut shop at 13,634.60, down 183 points or 1.32 percent.
Only four stocks - IndusInd Bank, Sun Pharma, ICICI Bank and HDFC Bank - could manage to end in the green in the Sensex index.
Mid and smallcap outperformed their larger peers as the BSE Midcap and Smallcap indices closed 0.69 percent and 0.25 percent lower, respectively.
In the last six sessions, Sensex and Nifty have come down by 7 percent and investors' wealth of about Rs 11.6 lakh crore have been eroded.
The market mood has turned fragile ahead of the Union Budget 2021. Besides, selling by FIIs in the last few days has also weighed on market sentiment.
"The market mood has turned fragile as investors have become wary of risks from the upcoming Union Budget and also selling by FIIs for three days in this week. International markets are also in correction mode due to new lockdowns being enforced in some countries and concerns over new strains of the Covid-19 virus," Rusmik Oza, Executive Vice President and Head of Fundamental Research at Kotak Securities pointed out.
Nifty broke 13,700 and closed below it on January 29. Now the index could slide further to 13,400 and thereafter to 13,200, said experts.
"The fall has been backed by very high volumes especially in the last hour of trade. Any rally can now be utilised to short the Nifty for lower targets. The resistance is now at 14,000 and until that is not crossed, we will remain in the grip of the bears," said Manish Hathiramani, proprietary index trader and technical analyst, Deen Dayal Investments.
Sectors and stocks
Among the sectors, Nifty Auto and IT fell almost 3 percent each, while Metal and Pharma indices fell up to 2 percent. Nifty PSU Bank index rose nearly 2 percent.
NIfty Bank, Private Bank and Realty, too, ended in the green.
A volume spike of over 300 percent was witnessed in TVS Motors. The stocks of Shriram Transport Finance Company and SAIL saw a volume spike of over 100 percent each.
The stocks of Shriram Transport, IndusInd Bank and TVS Motor saw long build-up while Havells, Mahindra & Mahindra Financial Services and Page Industries saw short build-up.
Nifty formed a bearish candle on the daily chart while India VIX moved up by 4.33 percent to close at 25.34. The surge in volatility due to selling pressure and ahead of the Budget 2021 could continue a volatile swing with limited upside in the market.
As per Chandan Taparis, Vice President and technical and derivative analyst at Motilal Oswal, till Nifty remains below 13,800, a bounce could be sold and weakness may be seen towards 13,500 and 13,300 levels while on the upside immediate hurdle exists at 13,800 and 14,000 levels.
Mazhar Mohammad, Chief Strategist – Technical Research & Trading Advisory, Chartviewindia.in, believes unless Nifty recovers and closes above the 50-day SMA, which is placed around 13,720, the market shall be in for a bigger correction with initial targets placed around 13,200 levels.
"In case Nifty closes above 14,000 levels in post Budget session then fresh buying can be considered as the probability of the near-term bottom shall be much higher. Traders are advised to remain neutral on the Budget day without a directional bet and wait for more clarity," he said.Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.