Friday’s frenzy fall! Sensex below 59,900, Nifty erases 17,900; all indices end deep in red

The mayhem on Friday was due to a steep selloff in global cues as apart from renewed fear of a rise in Covid cases in major economies, the better-than-expected US GDP Q3 data further signalled for more rate hikes by US Fed to tame inflation. 

Sensex nosedived by 980.93 points or 1.61% to end at 59,845.29. Nifty 50 shed 320.55 points or 1.77% to close at 17,806.80. On BSE, in the broader market, small cap stocks lost a hefty grip as they tumbled by a huge 1,168.84 points, while midcap stocks too plummeted by 858.44 points or 3.40%. All indexes in broader markets were trapped in deep red with a downside ranging from 2-4% with small-caps being the worst hit.

Further, all sectoral indices also witnessed a massive bloodbath with their downfall ranging from 2% to over 5%. In percentage terms, Utilities and Power indices dived around 5.17% and 4.89%. However, on BSE, the Capital Goods index dipped over 951 points, while the Auto, Bankex, Consumer Durables, Metals, and Oil & Gas indices slipped between 700-800 points. IT stocks as well faced massive selloffs.

Bank Nifty which had clocked a fresh lifetime high and crossed over the 44,000 mark last week, was in a free fall and even reached below 41,600 levels. After the market hours, Bank Nifty dropped 740.75 points or 1.75% to end at 41,668.05.

Investors lost their gains of last month and the initial days of December in a span of 4 days this week.

Also, Landmark Cars debuted on BSE and NSE at a discount of nearly 7% after its IPO. Due to the bearish markets’ tone, Landmark Cars stock closed at ₹460.05 apiece down by 2.4% from its listing price on BSE, however, lower by 9.08% from its IPO issue price. The company’s IPO subscribed by 3.06 times at a price band of ₹481-506 per share.

Both Sensex and Nifty 50 have corrected more than 5% from their record highs that were recorded on December 1st.

Talking about market performance, Amol Athawale, Deputy Vice President – Technical Research at Kotak Securities said, markets were caught in frenzied selling as weak global cues and bearish external factors pushed both the key benchmark indices below the psychological levels. Besides the spurt in Covid cases in China & Japan, the better-than-expected US Q3 GDP numbers further raised concerns that the Fed will go for more rate hikes to tame inflation, which further accentuated selling pressure in the markets.

Meanwhile, Ajit Mishra, VP – of Technical Research, at Religare Broking added that the pressure was widespread wherein PSU banks, metal, and energy stocks were hammered badly. The broader indices underperformed the benchmark and lost in the range of 3.5%-5%.

According to Vinod Nair, Head of Research at Geojit Financial Services, globally, markets were losing their grip post the Fed announcement which hinted on a further rate hike in the upcoming meeting. Robust US economic data points such as better-than-expected Q3 GDP, higher consumer confidence along with healthier jobless claims fuelled the worries flaming the volatility. Additionally, the spike in COVID cases across China dampened the appetite for risk as it instilled fears of another global COVID outbreak.

On Sensex, S Ranganathan, Head of Research at LKP Securities said, the sheer speed with which the Sensex came back below 60K today clearly reflected the mood to be in cash with several participants facing margin calls due to marked-to-market losses.

Further, on Nifty 50, Kotak Securities expert said, technically, after a long time the index closed below the 50 day SMA (Simple Moving Average) and also formed a long bearish candle on weekly charts which is broadly negative. For traders, as long as the index is trading below 18000, the correction wave is likely to continue and below the same, the index could slip till 17600-17500. On the flip side, 18000 could act as a sacrosanct resistance zone. The dismissal of 18000 could push the index till 50 day SMA or 18150-18200.

Going forward, Religare Broking expert said, indications are pointing towards the prevailing corrective move to extend further, with a marginal rebound in between. Meanwhile, mixed global cues will keep the volatility high thus we recommend keeping a check on leveraged positions and preferring a hedged approach.

At the interbank forex market, the rupee settled at 82.8575 against the US dollar compared to their previous closing of 82.7625. On the other hand, the forward premiums reached to one-month high with the USD/INR 1-year implied yield shooting up to 2.2%. Overall, this week, the rupee ended on a flat note compared to the 82.87 per dollar level of last week’s Friday.

The US recorded an annualized economic growth rate of 3.2% for the third quarter of the current fiscal — higher than the previously estimated 2.9% growth. The latest GDP data indicated that there was an upside in consumer spending and business investment despite rising interest rates and inflationary pressure. However, the robust labor market and wage growth kept household spending under pressure. Further, the latest print has led investors to believe there is a more rate hikes on card in the forthcoming policies by Federal Reserve for tackling stubbornly multi-decadal high inflation.

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before taking any investment decisions.