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Taking Stock: Scary Wednesday! Sensex drops below 40K; Nifty breaks 200-DMA

Nifty formed a Bearish candle on the daily charts. It slipped below its 200-DMA placed at 11,684 on daily charts.

February 26, 2020 / 05:31 PM IST

Bears continued their dominance on D-Street for the fourth consecutive day in a row on Wednesday and pushed benchmark indices below crucial support levels. The S&P BSE Sensex broke below 40,000 while the Nifty50 breached its 200-Day Moving Average (DMA).

World stocks tumbled for the fifth straight day after governments and health authorities warned of a possible coronavirus pandemic. Wall Street ended sharply lower on Tuesday and Asian markets excluding Japan lost 1 percent.

Let’s look at the final tally on D-Street – the S&P BSE Sensex closed 392 points lower at 39,888 while the Nifty50 lost 119 points to close at 11,678.

Sectorally, the telecom index closed in positive while selling pressure was seen in realty, auto, capital goods, oil & gas, power, energy, and metal stocks.

On the broader markets front, the S&P BSE Midcap index fell 1.3 percent while the S&P BSE Smallcap index was down 0.82 percent.

On a day when Sensex fell nearly 400 points, nearly 300 stocks on the BSE hit their fresh 52-week low. These include Gillette India, Hero MotoCorp, L&T, Thermax, BASF India, IFB Industries, and Kalpataru Power among others.

Experts are of the view that rising fears of coronavirus and expectations of muted GDP data towards the close of the week are keeping markets jittery. Volatility is on the rise due to F&O expiry due on Thursday.

"Increasing concern regarding coronavirus in the world over is impacting the global market. The economic impact is expected to be worse than thought earlier forcing investors to stay away from risky assets," Vinod Nair, Head of Research at Geojit Financial Services told Moneycontrol.

"Domestic market is bracing for yet another subdued GDP growth, with a forecasted of 4.6% to 4.7% in Q3 compared to 4.5% in Q2, which is adding to the fear," he said.

Top Nifty gainers: SBI, Bharti Infratel, and Yes Bank.

Top Nifty losers: Maruti Suzuki, Tata Motors, Sun Pharma, and GAIL India Ltd.

Stocks & Sectors:

Sectorally, the S&P BSE Telecom index was the lone gainer, up 0.25 percent while profit-taking was visible in Realty which fell 2.1 percent, followed by the S&P BSE Auto index that was down 2.12 percent, and the Capital Goods index fell 2.1 percent.

Volume spike of 100-200% was seen in stocks like Infosys, NTPC, Glenmark Pharma, Apollo Tyres, Bosch, and Asian Paints.

Long Buildup was seen in stocks like Equitas Holdings, Bharti Infratel, Havells India.

Short Buildup was seen in stocks like Asian Paints, Bosch, JSW Steel, Siemens, NTPC, and ACC.

Stocks in News

India Cements: Share price of India Cements surged 20 percent on February 26 after Gopikishan S Damani, the brother of ace investor Radhakishan Damani, bought 2.75 percent stake in the company a day earlier.

Aurobindo Pharma: Aurobindo Pharma share price rose more than a percent on February 26 after the company received EIR from USFDA.

Navin Fluorine: Shares of Navin Fluorine International gained 5 percent after the company bagged a multi-year contract from a global firm.

Shilpa Medicare: Shilpa Medicare ended 5 percent lower on February 26 after USFDA issued Form 483, with 15 observations for its Telangana facility.

Bandhan Bank: Bandhan Bank share price shed 2 percent on February 26 despite the RBI allowing the company to expand its branch network. .

Technical View:

Nifty formed a Bearish candle on the daily charts. It slipped below its 200-DMA placed at 11,684 on daily charts.

The index has been falling since 19 February. This is the fourth consecutive session when Nifty registered a negative close. The Supertrend indicator gave a ‘sell’ signal on the daily charts while MACD gave a bearish crossover on 24 February which suggests that the near term trend is likely to be on the downside.

The last time when this indicator gave a sell signal was on January 28 and the Nifty tested 11,600 levels before bouncing back.

The Nifty appears to have stretched on the downside by abnormally trading away from its short term moving averages (5-Day SMA at 11903) which should ideally pave the way for a pullback rally sooner than later.

In the next trading session if Nifty opens in a negative terrain then it can make an intraday bottom somewhere in the zone of 11,640 – 11,600 levels, suggest experts. But, if it closes below 11,614 levels then next support for the index is available only around 11,500 levels

“On the upside, if it manages to sustain above 11,783 then the upswing shall get extended upto 11,900 levels,” Mazhar Mohammad, Chief Strategist – Technical Research & Trading Advisory, told Moneycontrol.

“For time being traders with high-risk appetite are advised to create long positions if Nifty opens in a negative zone and trades between 11640 – 615 levels with a stop below 11600 on closing basis,” he said.

Kshitij Anand
Kshitij Anand is the Editor Markets at Moneycontrol.
first published: Feb 26, 2020 04:20 pm