Taking Stock | Sensex, Nifty fall for 3rd day in a row; investors lose over Rs 2 lakh crore in a day

Equity benchmarks witnessed strong volatility in intraday trade today, as investors booked profit in the run-up to the Budget.

After opening in the green and rising as much as 385 points, Sensex plunged 604 points in intraday trade, eventually ending 531 points, or 1.09 percent, lower at 48,347.59. Nifty closed 133 points, or 0.93 percent, down at 14,238.90.

Reliance Industries, IndusInd Bank, HCL Tech ended as the top laggards in the Nifty pack. Grasim Industries, UPL and Cipla bucked the trend and ended as the top three gainers in the Nifty index.

The sell-off was not restricted to only the benchmarks but mid and small-caps too experienced the heat. In sync with the benchmarks, BSE Midcap and Smallcap closed 1.14 percent and 1.15 percent down, respectively.

The overall market capitalisation of BSE-listed firms dropped to Rs 192.3 lakh crore on January 25 against Rs 194.4 lakh crore, making investors poorer by Rs 2.1 lakh crore in a single day.

The market breadth remained firmly in favour of declines as the advance-decline ratio stood at 1:3.

"Indian markets witnessed a highly volatile trade and closed in red due to weak global market and reports of Indo-China border tension. The downside was equally contributed by all the sectors except pharma which traded in the green," Vinod Nair, Head of Research at Geojit Financial Services, pointed out.

"Policy decisions of the US Fed meeting which will commence tomorrow will drive the global market in the coming days. We have seen Indian markets being highly volatile these days and this trend is expected to continue this week as we inch closer to the Union Budget," Nair added.

Ajit Mishra, VP - Research, Religare Broking, expects volatility to remain high in this holiday-shortened week due to the scheduled expiry of January month derivatives contracts.

Besides, he pointed out as participants are speculating on the probable announcements in the Union Budget, it will further add to the volatility.

"We reiterate our view that a decisive close below 14,200 in Nifty would derail the present momentum so participants should align their positions accordingly," Mishra said.

Sectors & stocks

BSE Energy index fell as much as 4.44 percent, ending the day as the top sectoral laggard, followed by Oil & Gas index which ended 2.16 percent lower.

While most sectors ended with losses, BSE Healthcare ended 0.93 percent higher. Metal and basic materials indices ended flat.

Over 380 stocks, including Indo Count Industries, Future Consumer, Arshiya, Madras Fertilizers and Kopran, hit their lower circuits on BSE.

Stocks of Vodafone Idea and Sun TV witnessed a volume spike of over 1,000 percent each. Indus Tower, Shree Cement, HCL Tech and UltraTech Cement were the stocks that saw a volume spike of over 200 percent each.

Aurobindo Pharma, Grasim and Shriram Transport Finance were among the stocks that witnessed long build-up. On the flip side, Apollo Tyres, Vodafone Idea and Info Edge India, were among the stocks that witnessed short build-up.

Tech view

As per the current technical structure, the market looks tilted towards the bears and it appears that the market trend may be changing in favour of bears.

"Nifty formed three black crows candle pattern which is bearish in nature. The index has breached all good support which hints if it remains below today’s low, it may hit 14,000 mark soon which is strong support on the downside," said Rohit Singre, Senior Technical Analyst at LKP Securities.

"On the higher side, now the index has good resistance near 14,350-14,440 zone which would be profit-booking levels for longs."

Mazhar Mohammad, Chief Strategist – Technical Research & Trading Advisory, Chartviewindia.in believes if Nifty sustains above 14,218 levels and manages a positive close then there will be a higher probability of the market witnessing consolidation for a couple of trading sessions with a pullback rally and strength in Nifty shall not be expected unless it closes above 14,650 levels.

"If Nifty continues its downward spiral beyond 14,218 then the current leg of downswing shall extend into the zone of 13,990 – 950 levels where the confluence of supports are placed based on conventional technical parameters. For time being traders are advised to avoid long side bets whereas intraday traders with a high-risk appetite can consider shorting below 14,218 levels and look for a downside target placed in the zone of 14,050 – 13,090," he said.

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