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The stock markets ended Wednesday’s session on a losing note with profit booking at higher levels. The Nifty50 ended 1.4 per cent down at 21,150.15 points.
There was selling across the board with all sectors ending in the red. The VIX, which measures the India volatility index spiked 4 per cent to 14.45. The broader market indices fell even more than the Nifty with the advances to decline ratio falling to 0.11 to 1, the lowest in almost a year. Cash market volumes on the NSE were below ₹1 lakh crore.
The Nifty Midcap 100 fell 3.3 per cent, the Nifty smallCap 500 was down 3.3 per cent, while the Nifty 500 ended 2 per cent lower, indicating the broad-based sell-off. The Bank Nifty fell sharply throughout the day to close at 47,445, down 426 points. The 30-scrip Sensex ended 1.3 per cent or 930.88 points lower at 70,506.31 points.
In terms of sectors, the losses were led by software stocks and shares of financial services companies.
The equity markets have run up over 12 per cent in the last seven weeks and the steep fall is being seen as a much-needed correction and consolidation. This is the biggest one-day fall in the Nifty index in a year. “We expect market to consolidate in the near term as investor resort to profit booking and access the potential risk of rising Covid cases especially in Kerala and Karnataka, making them cautious in the market,” said Siddhartha Khemka, Head - Retail Research, Motilal Oswal Financial Services.
The technical charts suggested the possibility of a downward reversal, according to Deepak Jasani, Head of Retail Research, HDFC Securities.
There was a build-up of short positions in Nifty futures as indicated by the futures open interest position, pointed out Ashwin Ramani, Derivatives & Technical Analyst at SAMCO Securities.
“While the reason for the sudden reversal remains unclear, several factors could be at play,” said Parth Nyati, founder of Tradingo.
“The easy money sentiment buoyed by a bullish primary market may have set the stage for a correction. Additionally, tight liquidity among HNIs due to their involvement in IPOs could have contributed to the selling pressure. The recent rise in Covid cases may also be serving as a convenient excuse for some investors to exit,” he added.
Losers
The markets had opened on a positive note and hit new highs during the early part of the trading session, but lost steam quickly and continued to fall throughout the trading session.
Leading the charge at the start of the session, shares of software companies reversed gains on aggressive selling and the Nifty IT index ended 604 points lower, with all of the constituents ending in the red.
In the financial services sector, bank stocks fell under selling pressure as also did insurance companies and NBFCs. Financials dragged down the Nifty50 by over 0.4 per cent.
Both Adani Enterprises and Adani Ports fell over 5 per cent each, Coal India ended 4 per cent lower, Tata Steel was down 4.2 per cent, while UPL ended 4.4 per cent down.
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