Taking Stock | Selling on fourth day drag Nifty below 17,000, Sensex falls 953 pts

The market continued to witness selling for the fourth straight session on September 26. It started the new week on a negative note, amid weak global cues and extended the losses as the day progressed. However, despite the intraday recovery, the market finished near the day's low point.

Selling across the sectors, except Information Technology (IT) and the rupee hitting a fresh record low (81.66) dragged the indices to a two-month low with the Nifty falling below 17,000, intraday.

At Close, the Sensex was down 953.70 points or 1.64% at 57,145.22, and the Nifty was down 311 points or 1.79% at 17,016.30.

"The soaring dollar as a result of aggressive monetary tightening, slowing economic growth and rising demand from cautious investors are causing turbulence in the global equity market. This is creating mayhem in the domestic market led by weakening INR, elevated bond yields and pessimistic trends of Asian peers," said Vinod Nair, Head of Research at Geojit Financial Services.

"Only the IT sector, which exhibited the weakest performance in the last 1yr, defied the trend in anticipation that the global recession is mostly factored in the price and are trading at reasonable valuations," he added.

Tata Motors, Adani Ports, Hindalco Industries, Maruti Suzuki and Eicher Motors were among the top losers on the Nifty. Gainers included HCL Technologies, Infosys, Asian Paints, Divis Labs and UltraTech Cement.

Among sectors, the Information Technology index added 0.5 percent, while all other sectoral indices ended in the red with Nifty Bank, Auto, FMCG, Metal and Pharma indices down 1-3 percent.

On the BSE, Auto, Power, Realty, Metal and Oil & Gas indices fell 3-4 percent, while Bank, Capital Goods and FMCG indices shed 2 percent each. However, the Information Technology index ended in the green.

Broader indices underperformed the main indices with the BSE Midcap index falling 2.84 percent and Smallcap indices declining 3.33 percent.

A short build-up was seen in RBL Bank, India Cements and Mahindra & Mahindra Financial Services, while a long build-up was witnessed in Metropolis Healthcare, Mphasis and Infosys.

Among individual stocks, a volume spike of more than 300 percent was seen in RBL Bank, Alkem and JSW Steel.

More than 100 stocks hit 52-week high, including Butterfly Gandhimathi Appliances, PC Jeweller, Westlife Development.

However, Aurobindo Pharma, TCS, Gland Pharma, Infosys, Morepen Laboratories, Mphasis, Persistent Systems, touched their 52-week low on the BSE.

The speed with which central banks across the globe are hiking interest rates, investors are worried that slackening growth would push key economies into recession.

With the monetary policy decisions on the anvil, rate-sensitive stocks like banking, realty & auto crumbled badly as rate hikes could dent demand going ahead.

However, due to markets being in oversold territory, we could witness a quick pullback rally. For traders, the 200-day SMA and 16850 would act as a key support level. On the flip side 17150 and 17200 could be the immediate hurdle for the bulls.

The Indian market takes another step lower, chasing the global nod. Investors remained nervous as the RBI may follow the lead of global counterparts, including the US Federal Reserve, and raise interest rates on Friday to tame stubborn inflation. The rupee fell 0.68 percent against the US dollar on Monday, reaching a new low of 81.66.

In the short-term, markets can remain volatile following the global macroeconomic uncertainty and rising interest rates. Nifty has breached psychological 17000 levels, as 17250-17320 will now act as immediate resistance, whereas support is placed around the 16800 levels.

Markets slumped sharply lower and lost nearly 2%, in continuation of Friday’s decline. Weak global cues weighed the sentiment in the early trades, leading to a gap-down start, followed by volatile swings till the end.

Finally, the Nifty index settled closer to the day’s low to close at 17,016 levels. The selling pressure was widespread and all the sectoral indices, barring IT, ended deep in the red. The broader indices also traded in tandem with the trend and lost over 3% each.

With no respite on the global front and a resumption of selling from foreign investors, we expect markets to remain under pressure and test the 16,800-16,900 zone in Nifty. Select pockets from FMCG, pharma and IT are showing resilience while the majority are reeling under pressure. Participants should align their positions accordingly.

The Nifty has been in a short term correction mode for the last couple of weeks. On September 26, it had a gap down opening on account of the global cues & had a follow through selling as well. On the way down, it breached the August swing low of 17166. The selling pressure was absorbed near the 200 DMA.

The index also has a support from a gap area of 16947-17018, which was formed in July on the daily chart. The index attempted an intraday bounce thereon however couldn’t have a sustainable recovery. On the higher side, 17200 is acting as a near term hurdle. On the flip side, if the Nifty breaches the gap area, then it can continue to slide till 16800.

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