Taking Stock: Bears tighten grip on D-St; Sensex down 796 points, Nifty at 19,900

Today's fall eroded investors' wealth by Rs 2.25 lakh crore, as the market capitalisation of BSE-listed companies slipped to Rs 320.75 lakh crore from Rs 323 lakh crore in the previous session.

Biggest losers on the Nifty were HDFC Bank, JSW Steel, Reliance Industries, BPCL and SBI Life Insurance, while gainers included Power Grid Corporation, Coal India, ONGC, Sun Pharma and Eicher Motors.

Amongst sectors, except power, all other sectoral indices ended in the red with bank, metal and realty down one percent each.

The BSE midcap index shed 0.30 percent and Smallcap index declined 0.5 percent.

A long build-up was seen in AU Small Finance Bank, Polycab India and Dr Lal PathLabs, while a short build-up was seen in HDFC Bank, JK Cement and Zydus Lifesciences.

Among individual stocks, a volume spike of more than 300 percent was seen in Hindustan Copper, Mahindra & Mahindra Financial Services and India Cements.

Nearly 200 stocks touched their 52-week high on the BSE, including GPT Infraprojects, Axis Bank, Thomas Scott, Indusind Bank, Karnataka Bank, Dhampur Sugar Mills, Union Bank Of India, Tata Consultancy Services, Coal India. Click to View Full List

Outlook for September 21

Shrikant Chouhan, Head of Research (Retail), Kotak Securities:

Correction has been due for some time and valuations too were getting expensive after the recent spike, and hence investors resorted to profit-taking ahead of the outcome of the US FOMC meeting on interest rates. There are also concerns that the ongoing tension between US & Canada could have some bearing on the markets, and if the situation flares up there could be some impact on our markets.

Technically, intense selling saw the Nifty slip below the 20000 mark, which is largely negative. For the bulls now, 20000- 20030 could act as immediate resistance areas while 19825-19775 could act as a crucial support zone for the traders.

Jatin Gedia – Technical Research Analyst at Sharekhan by BNP Paribas:

The Nifty opened gap down and traded with a negative bias throughout the day to close down 232 points. On the daily charts we can observe that the Nifty is in the process of retracing the rise it has witnessed from 19223 – 20222. On the downside it can drift towards 19840 where the 38.2% Fibonacci retracement level is placed.

The Nifty has witnessed a faster retracement and also breached the low of 19914 (wave IV low) which suggests that the rise from 19223 to 20222 has completed a wave. The daily momentum indicator still has a positive crossover however we shall assign more weightage to the price action and expect the momentum to align with the price action sooner rather than later. In terms of levels, 19840 – 19800 is the crucial support zone, while 20050 – 20100 shall act as an immediate hurdle zone.

Bank Nifty has also entered correction mode. It was unable to break the previous swing high which was a sign of weakness. On the downside the Bank Nifty can drift towards 45070 – 44930 where support in the form of the 50% fibonacci retracement level and the 20-day moving average is placed respectively. Considering the sharp fall a pullback is possible however we expect it to be sold into and that should be the ideal trading strategy from short term perspective.

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