Indian stock markets fell sharply today with benchmark index Sensex plunging over 1,145 points to 49,744 in biggest selloff since December. The Nifty settled 2% lower at 14,675. Weak global equity sentiment, stretched valuations, concern over rising covid cases in India and profit-taking were blamed for today's selloff. Equities in India rose sharply in the first two weeks of February, driven by solid corporate earnings, Budget and strong foreign fund inflows. But profit-taking has been seen in recent sessions as some investors locked in profits in recent winners on concerns that valuations are getting stretched.
"Nifty has cracked the support of 14800 with utmost ease and on the back of good volumes. We should slide to 14500 which should be the next level of support failing which 14300 would be the next target for the Nifty. The resistance on the upside now stands at 15100 and until we do not cross that, a rally up can be utilized to short the Nifty for lower targets," said Manish Hathiramani, Proprietary Index Trader and Technical Analyst, Deen Dayal Investments.
Here are 10 updates:
1) Just three stocks - ONGC, HDFC Bank and Kotak Bank - among the 30 Sensex stocks were trading in the green.
2) Reliance Industries, TCS, Axis Bank, IndusInd Bank, M&M and Dr Reddy's were down between 3.5% and 4.5%.
3) Analysts say that rising US bond yields has spooked investors who fear that money might move away from emerging markets.
4) Back home, rising covid cases in Maharashtra has also dented sentiment. Maharashtra has ordered fresh restrictions on people's movement and imposed night curfews in some cities, though not in the financial capital Mumbai.
5) The state has reported nearly 7,000 new cases in past 24 hours, a steep rise from just 2,000 cases earlier this month. Latest figures given by the health ministry on Monday, showed India reported 14,199 new infections, and 83 new deaths on Sunday.
6) "US President Joe Biden's push for a $1.9 trillion Covid-19 relief plan took a move ahead when the US House of Representatives Committee released bills that Democrats expect to enact by next week. The hope of improvement in US economy has triggered the global fund to reallocate their portfolio weightage back to the US by reducing the exposure in the overstretched emerging market. This led to profit booking, and we witnessed the market break below the critical level of 14750," said Ashis Biswas, Head of Technical Research at CapitalVia Global Research.
"However, we believe that 14500-14300 will attract demand in the market and the recent down leg is likely to arrest around the level of 14500-14300."
7) Other global markets mostly were lower today as falling infection rates and more good news on the vaccine front were overshadowed by growing worries about high valuations and inflation.
8) The India VIX index, commonly know as fear gauge, surged 14% to 25.47, indicating nervousness among investors.
9) Meanwhile, Goldman Sachs has raised by $10 its Brent crude oil price forecasts for the second and third quarters of 2021, citing lower expected inventories, higher marginal costs to restart upstream activity and speculative inflows.
10) All eyes will be on Federal Reserve Chair Jerome Powell’s testimony to Congress this week. The central bank chief is set to echo remarks that policy makers are fully committed to supporting the economy. Investors will also look for any sign that he’s troubled by steeper long-term borrowing costs after the real rates on long bonds rose above zero for the first time since June. (With Agency Inputs)
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