Market carnage: Sensex suffers fourth-biggest single day loss in absolute terms

A man reacts as he looks at a screen displaying the Sensex results outside the Bombay Stock Exchange building, Mumbai, March 12. REUTERS

Weak global cues, muted results from India Inc, zero sales from top auto manufacturers, an extension of lockdown by another 2-weeks and contraction in manufacturing activity led to profit-taking on D-Street on May 4 after a sharp 14 percent rally seen in benchmark indices in April.

BSE Sensex plunged 2,002 points to end at 31,715 while the Nifty50 closed 566 points down at 9,293.

Investors lose nearly 6 lakh cr in a single trading session. The average market capitalisation of the BSE-listed companies fell from Rs 129.41 lakh cr recorded on April 30 to Rs 123.69 lakh cr on May 4.

In absolute terms, it was the fourth biggest single-day fall of the benchmark Sensex, data from Ace Equity showed. The top three falls of 3,934.72 points, 2,919.26 points and 2,713.41 points, occurred in March 2020.

"The abrupt end of the recovery has certainly caught the participants completely off-guard and we might see the index drifting further lower ahead," said Ajit Mishra, VP - Research, Religare Broking.

"With no major development on the local front, we feel the global cues would continue to dictate the market trend. However, any news on a stimulus package for the ailing sectors may provide a breather. Besides, the earnings announcement would continue to induce stock-specific volatility so participants should plan their trades accordingly," he added.

Nifty formed an Island Reversal formation perhaps owing to weak global cues which were accompanied with further extension of lockdown

Technically speaking indices should remain under pressure unless they close above 9732 levels. In such a scenario all pull back attempts towards 9500 levels shall be considered as an opportunity to create fresh short positions, suggest experts.

Meanwhile, some support on the downside can be expected around 9250 levels and a breach could take it towards 8900 levels.