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Taking Stock: US Fed minutes scare away bulls; Sensex plunges nearly 400 points

The Fed Reserve meeting minutes that were released on August 19 cast doubts on the nascent recovery in the labour market and said the coronavirus would weigh heavily on the US economy.

August 20, 2020 / 07:36 PM IST

Indian markets got off to a shaky start and ended in the red, tracking weakness in global markets on August 20. The S&P BSE Sensex plunged 394 points to 38,220 while the Nifty50 closed the day 96 points lower at 11,312.

"Indian indices along with global markets traded in the red today, on the back of US Fed Reserve’s grim July meeting minutes. The Fed Reserve cast doubts on the nascent recovery of the labour market seen in the previous months and its sustainability,” Vinod Nair, Head of Research at Geojit Financial Services told Moneycontrol.

The minutes of the Fed Reserve meeting that were shared on August 19 expressed concern over recovery and said the coronavirus would weigh heavily on the US economy.

“Markets, globally, were banking on expectations of a steady recovery in the major economies and the consequent return to normalcy for businesses. Although there was nothing new in the minutes, markets reacted negatively to it,” Nair said.

Close

Sectorally, action was seen in utilities, power, infrastructure and metal stocks while profit-taking was visible in telecom, banks, finance and energy space.

The broader markets outperformed the benchmarks. The S&P BSE midcap index was up 0.8 percent while the smallcap index closed with gains of 0.7 percent.

Top Nifty gainers included Coal India, ONGC and NTPC.

IndexPricesChangeChange%
Sensex58,853.07465.14 +0.80%
Nifty 5017,525.10127.60 +0.73%
Nifty Bank38,237.40316.80 +0.84%
Nifty 50 17,525.10 127.60 (0.73%)
Mon, Aug 08, 2022
Biggest GainerPricesChangeChange%
Coal India215.406.95 +3.33%
Biggest LoserPricesChangeChange%
BPCL325.65-10.75 -3.20%
Best SectorPricesChangeChange%
Nifty Metal5668.0072.15 +1.29%
Worst SectorPricesChangeChange%
Nifty PSU Bank2816.80-12.60 -0.45%

Top Nifty losers included Wipro, Axis Bank, and Tata Motors.

Stocks & Sectors

Sectorally, S&P BSE utilities index was up 4.2 percent followed by the power index that was up 4.1 percent and the infrastructure index closed with gains of 1.8 percent.

Profit-taking was visible in the telecom index that was down 1.7 percent followed by the Bankex that fell 1.3 percent and the energy index was down 1.07 percent.

A volume spike of more than 100 percent was seen in stocks like ONGC, NTPC and Torrent Power.

Long buildup was seen in stocks like Torrent Power, JSW Steel and ZEE Entertainment.

Short buildup was seen in stocks like IndusInd Bank, Muthoot Finance, and ICICI Bank.

More than 150 stocks hit their fresh 52-week high on the BSE. These included Atul, Astec Lifesciences, Tata Communications and JB Chemicals.

Stocks in news

Aarti Drugs stock surged 20 percent after the board of directors approved the issuance of fully paid-up bonus shares.

Power stocks rallied up to 12 percent a day after the cabinet committee on economic affairs (CCEA) relaxed the borrowing limits for the state government-owned power distribution companies (discoms) as a one-time measure.

Muthoot Finance share price shed over 5 percent after brokerages expressed concern over the high valuation of the stock.

Gateway Distriparks stock price jumped over 5 percent after the board approved raising of funds through an issue of equity shares to shareholders on a right basis for an amount aggregating Rs 115,97,65,848.

Hindustan Aeronautics share price shed over 4 percent on August 20 following reports that the government was planning to sell a five percent stake in state-owned defence player via an offer for sale.

Technical View

The Nifty formed a small-bodied candle on the daily charts. It closed below 5-day EMA placed around 11,323.

The price formation indicated that declines were being bought but follow-up buying momentum was missing at higher zones, experts said.

The major trend of the index was still positive but it would have to surpass the recent swing highs to begin the next move.

It has to hold above 11,250 to move towards 11,450-11,500 levels while on the downside, support exists at 11,200-11,150 zones, Chandan Taparia of Motilal Oswal Financial Services Limited said.

Disclaimer: The views and investment tips expressed by experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
Kshitij Anand is the Editor Markets at Moneycontrol.
first published: Aug 20, 2020 04:43 pm
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