Taking Stock: Rs 3 lakh crore in m-cap gone as Sensex drops 1,000 pts

Indian market snapped a ten-day winning streak on October 15 as bears took control of the D-Street and pushed Sensex and Nifty50 below crucial support levels wiping out more than Rs 3 lakh crore worth of market capitalisation on the BSE in just one session.

The S&P BSE Sensex plunged more than 1,000 point and erased nearly 40 percent of gains seen in the previous ten sessions. The Nifty50 closed below its crucial support placed at 11,700.

Let’s look at the final tally on D-Street – the S&P BSE Sensex fell 1,066 points to 39,728 while the Nifty50 closed with losses of 290 points to 11,680.

The average market capitalisation of the BSE-listed companies fell Rs 3.3 lakh crore in a single session. The average market capitalisation fell from Rs 160.56 lakh crore as on 14 October to Rs 157.24 lakh crore as on October 15.

Sectorally, the selling pressure was seen in sectors like Teleco, Banks, Energy, IT, as well as Realty index. The Nifty Bank slipped 802 points to close at 23,072.

On the broader markets front – the S&P BSE Midcap index was down 1.7 percent while the S&P BSE Smallcap index falls 1.4 percent.

Disappointment with respect to the stimulus packages from the government and fears of extension of lockdown globally that could delay recovery weighed on sentiment.

"The market had moved up in expectation of a big stimulus, but the desired fiscal package was not announced in India and a delay of it in US and Europe has changed the trend,” Vinod Nair, Head of Research at Geojit Financial Services told Moneycontrol.

“At the same time, the pace of economic recovery is under stress because of a resurgence in infection rate, mounting to high economic restrictions,” he said.

Nair further added that the margin of safety is low given premium prices and the slowdown in economic recovery. The trend going forward will depend on the supportive measures announced in context to stimulus and commentary of Q2 results.

Top Nifty gainers include Hero MotoCorp, JSW Steel, and Asian Paints.

Top Nifty losers include IndusInd Bank, Tech Mahindra, and Bajaj Finance.

Stocks & Sectors:

Sectorally, the S&P BSE Telecom index was down 3.5 percent, followed by the S&P BSE Bankex which fell 3.3 percent, and the S&P BSE IT index closed with losses of 2.6 percent.

Volume spike of more than 100% was seen in stocks like Berger Paints, Ashok Leyland, and Adani Enterprises.

Short Buildup was seen in stocks like Motherson Sumi, Godrej Properties, and Bajj Finance.

Technical View:

Finally, bears appear to have outnumbered the bulls as Nifty50 registered a Long Black Day kind of formation.

This steep correction appears to have set the tone for a fresh leg of down swing with a near term top in placed at a high of 12,025 levels, suggest experts.

“In the next session, if Nifty slips below 11,661 levels then the slide shall continue towards its initial target placed in the zone of 11,495 – 400 levels. However, if it manages to sustain above 11,661 levels on a closing basis then it can slip into a consolidation phase for a couple of sessions but rallies towards the zone of 11,800 – 850 will remain vulnerable for a sell-off,” Mazhar Mohammad of Chartviewindia.in said.

“Therefore, positional traders are advised to create shorts on rallies whereas intraday traders shall short below 11,661 levels and look for targets somewhere close to 11,500 levels,” he said.