Tracking weakness in global markets, Indian equity markets witnessed a kneejerk reaction that pushed the benchmark indices below crucial support levels.
Tracking weakness in global markets, Indian equity markets witnessed a kneejerk reaction that pushed the benchmark indices below crucial support levels.
The S&P BSE Sensex sank below its crucial psychological support of 41,000 while the Nifty dropped below 12,000 levels in intraday trade.
Sectorally, action was seen in IT stocks while profit-taking was visible in metals, auto, power, telecom, and banks.We have listed top four factors that could be weighing on markets:
Coronavirus spreads beyond China
Coronavirus that has already killed more than 2,400 people in China is spreading in other countries. Neighbouring South Korea reported 161 more new cases on February 24, taking the nationwide total to 763, the highest number of infections in the world outside China, a PTI report said.
The number of coronavirus cases in Italy has jumped to more than 100, the president of the Lombardy region said on February 23, as northern towns struggled to contain rising infections.
The International Monetary Fund (IMF) has warned that the coronavirus epidemic could put an already fragile global economy recovery at risk.
Global growth was poised for a modest rebound to 3.3 percent this year, up from 2.9 percent last year, said a report.
Global selloff
The rising fears of Coronavirus spreading across geographies have invoked risk-off sentiment. Global shares slid as the spread of the flu-like virus outside China darkened the outlook for the world growth outlook.
In a sign of panic, the US stock futures were sold with E-minis for the S&P500 falling 1.2 percent in early Asian trade while Nikkei futures slipped over 2 percent. EuroStoxx 50 futures declined 1.5 percent while futures for London’s FTSE skidded 1 percent.
South Korea's KOSPI index fell about 3 percent. Chinese shares opened down with the blue-chip CSI300 index easing 0.6 percent.
Rupee 24 paise lower
The Indian rupee opened 24 paise lower at 71.89 per dollar on February 24 against the previous session’s close at 71.65. Last week, the rupee ended marginally lower at 71.65 on February 20 against the February 14 closing of 71.36.
The rupee suffered a fall, tracking weakness in other Asian peers while safe-haven gold surged as concerns mounted for world growth with coronavirus infections and deaths rising in South Korea, Italy, and West Asia.
Technical factors
The Nifty50, which closed with losses of 0.27 percent for the week ended February 20, slipped below 12,000 on Monday. The Nifty50 failed to hold on to 100-day moving average placed around 11,960.
If the Nifty closes below 12,000, then the decline could extend towards 11,900, which is likely to lend crucial support for the index, say experts.
"The momentum is expected to fizzle out in the coming week and higher side profit-bookings are likely to emerge. There will be more buyers who are waiting to enter at around 11,900 levels," Umesh Mehta, Head of Research, Samco Securities, told Moneycontrol.
"The Nifty50 is now constrained within a range of 11,900-12,250 and the break from either side is likely to decide the trend going forward."
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.
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