There was heavy selling seen across midcaps, along with weakness in auto, FMCG, infra and metal names.
Dominated by selloff in index heavyweights along with other weak domestic and global cues made benchmark indices trade plunge over 1 percent. The Sensex cracked over 500 points, while the Nifty managed to breach 10,200.
There was heavy selling seen across midcaps, along with weakness in auto, FMCG, infra and metal names.
Selling pressure intensified especially after a key ally of the ruling coalition decided to exit NDA.
Moneycontrol lists detailed reasons why the market fell today.
TDP pulls out of NDA
Political noise seems to have troubled the Street on Friday. As such, there is a worry among experts that 2019 elections may not be a cakewalk for the ruling party. But any other political development too seems to affect the market.
The politburo of the Telugu Desam Party (TDP) announced that it is breaking its ties with the National Democratic Alliance (NDA).
The TDP stated that the party will also move a “no-confidence” motion against the Modi government.
The party said that it is in protest against the injustice that the NDA government has meted out against Andhra Pradesh since the time of its bifurcation.
The announcement comes weeks after the Central government presented the budget, after the TDP, the ruling majority party in Andhra Pradesh, said that was not given its due.
Trade war concerns
According to reports on news agency Reuters, the trade war concerns were likely to bother investors more as well.
The Wall Street Journal reported that the Trump administration was looking to impose tariffs on at least $30 billion of imports from China. Reuters on Tuesday said the figure could be around $60 billion.
Some investors are concerned that tariffs could result in retaliatory actions taken by U.S. trading partners, which could in turn lead to a trade war that dents growth, CNBC.com reported.
Despite that, White House National Trade Council Director Peter Navarro on Thursday told CNBC that the U.S. could implement tariffs on imports without causing a trade war.
Technical factors
On Thursday, the Nifty broke below its crucial support placed around 100-days exponential moving average (DEMA) placed around 10410, 13-DEMA, and 5-DEMA.
Experts had said that the index had to decisively close above 10,480-odd levels and traders were advised to remain focused on stock-specific moves till a directional move had arisen.
According to Hadrien Mendonca of IIFL, the Nifty and Bank Nifty both continue to remain in the Lower Top Lower Bottom structure. Nifty is precariously poised above the 200-DMA of 10100 while Bank Nifty too is managing to currently hold above its yearly mean of 24500. The weak structure will be negated only when Nifty manages to break above 10640 mark till then it is advisable to remain cautious with long positions.
Global cues
There were weak set of trades from the global markets as well. Trade war factors along with instability inside The White House was bothering the Street as well.
Most Asian markets closed mixed on the last day of the trading week amid a backdrop of global trade-related developments and political news out of Washington.
In Tokyo, the Nikkei 225 gave up earlier gains to close lower by 0.58 percent, or 127.44 points, at 21,676.51. Despite those losses, the benchmark finished the week up 1 percent. The broader Topix was off by 0.4 percent.
European markets were mixed, as reports of further political disruption in the White House tested investors' nerves.The pan-European Stoxx 600 was flat during early morning deals, with sectors and major bourses pointing in opposite directions. Germany's DAX opened late on Friday morning as Eurex reported the index had experienced delays.
Index heavyweights
There was heavy selling among index heavyweights such as HDFC Bank, Reliance Industries and HDFC, among others. Infosys, ITC and HDFC Bank, among the big 5 contributors to Sensex’s losses lost around 1-2 percent as well.