Sensex falls 430 points, Nifty slips below 11,200; check what led to share market sell-off today

State Bank of India was the worst-performing stock, down more than 5 per cent

Weighed down by weak global cues, escalation in India-China border tensions, news of a rebound in COVID-19 cases, headline indices fell nearly per cent today. In intraday deals, the 30-share BSE Sensex tumbled 430 points, slipping below the crucial 38,000-mark to trade at 37,935. Broader Nifty 50 index breached the psychological level of 11,200 on the downside. State Bank of India (SBI) was the worst-performing stock, down more than 5 per cent. The broader markets too underperformed the Sensex and Nifty today with BSE MidCap index down 0.78 per cent at 14,369. The BSE SmallCap index plunged 1.55 per cent and was ruling at 14,214.

Check what’s behind Sensex’ 430-pt fall today

According to market watchers, several reasons such as weak global cues, concerns over India-China tensions, and the news of AstraZeneca Pharma pausing trials of its COVID-19 vaccine led to a fall in markets today. Rajesh Agarwal, Head of Research, AUM Capital Market, told Financial Express Online that this was further exacerbated by Moody’s comments that companies will not be immune from the deep economic contraction in India following the Covid-19 pandemic. Moreover, negative FII inflows from the last few days also added to profit booking. Volumes though are on the lower side.

Analysts believe that liquidity is driving the markets globally and therefore major indices are more dependent on the same. Narendra Solanki, Head – Equity Research (Fundamental), Anand Rathi Shares and Stock Brokers, told Financial Express Online that stock-specific investment opportunities are still there. Solanki further added saying that the risk-reward equation is currently tilted more on the risk side as far as the upside is concerned. While outside the indices, there are still opportunities in stock specific strategies.

Reasons behind the market fall are technical in nature

Technical analysts believe that the reasons behind the 430-point fall in the markets are technical in nature as of now. “The markets had got overstretched on certain technical indicators; what we are seeing right now is nothing but a reversion to the mean,” Milan Vaishnav, CMT, MSTA, Consulting Technical Analyst, Gemstone Equity Research & Advisory Services, told Financial Express Online. Vaishnav further added that even if the Nifty corrects and tests the 50-DMA which is presently at 11137, it will not be any form of structural damage to the markets. Only a slip below 11130 will be a technically negative point and can invite incremental weakness in the markets.

Markets to remain volatile

Going forward, Rajesh Agarwal expects markets to be volatile, since there are no domestic triggers in the short term, it would continue to track global markets and Indo-China developments. Positive commentary from auto companies after the monthly numbers and the fact that India’s factory activity grew for the first time in five months would help the market in gaining ground.