Sensex, Nifty down nearly 2% as bears tighten grip

It was another painful day on Dalal Street on Monday as bears kept a solid grip on the market with benchmark indices ending in deep red amid volatility.

Led by PSU bank stocks, market witnessed across-the-board selling, amid valuation concerns, with FIIs continuing their spell spree. Market is likely to remain volatile this week ahead of the F&O expiry.  

The BSE Sensex closed at 58,465.89, down 1170.12 points or 1.96 per cent. It recorded an intraday high of 59,778.37 and a low of 58,011.92. The Nifty 50 ended at 17,416.55, down 348.25 points or 1.96 per cent. It recorded an intraday high of 17,805.25 and a low of 17,280.45.

The volatility index surged nearly 18 per cent to end at 17.52, signalling caution among investors.

2,500 stocks in red

The market breadth continued to favour the decliners with 2,498 stocks declining on the BSE as against 906 that advanced while 164 remained unchanged. Furthermore, 374 stocks hit the lower circuit as compared to the 359 stocks that were locked in the upper circuit. Besides, 195 stocks touched a 52-week high level and 81 touched a 52-week low.

A surge in dollar index and fresh rise in Covid-19 cases across various parts of the globe have impacted investor sentiments.

Narendra Solanki, Head- Equity Research (Fundamental), Anand Rathi Shares & Stock Brokers, said, “Indian markets opened on a negative despite mixed Asian market cues as China on Monday kept the one-year Loan Prime Rate (LPR) unchanged.”

Bharti Airtel, JSW Steel, Asian Paints, Powergrid and Hindalco were the top gainers on the Nifty 50 while Bajaj Finance, Bajaj Finserv, Tata Motors, Reliance and NTPC were the top losers.

“During the afternoon session markets further drifted lower and traded at day’s low amid resurgence of coronavirus outbreaks in Europe and some other regions. Also, adding to growing speculation traders feared that central banks could have to tighten monetary policy quicker to tame a spike in inflation. Traders’ sentiments were impacted as foreign institutional investors (FIIs) continued to remain net sellers in the capital market,” added Solanki.

Profit-taking

Amit Gupta, Fund Manager – PMS, ICICI Securities said, “With the recent correction, markets have entered into consolidation phase where stock-specific volatility can be utilised to form the equity portfolios. The stretched valuation segments are witnessing profit booking and money is flowing into value segments where earnings have started to grow after several earnings of stagnation.”

S Ranganathan, Head of Research at LKP securities said, "Finally the Bears got their act together after a long wait as a series of events over the weekend gave them the upper hand. The repeal of the agriculture laws had an impact on the PSU stocks while the O2C deal not going through left a 4.5 per cent cut on Reliance. Even as IPO Investors come to terms with the reality, the inflationary impact on demand across several sectors continues to worry the street."

Reliance Industries plunged 4.35 per cent at closing on the NSE after the company announced its decision to shelve the proposal to sell a 20 per cent stake in its oil refinery and petrochemical business to Saudi Aramco for $15 billion. Reliance and Saudi Aramco have mutually determined to re-evaluate the proposed investment in O2C business.

Across the board selling

On the sectoral front, all indices closed in the red, the fall being led by PSU Bank and realty. Auto, media, oil & gas, consumer durables and healthcare stocks also suffered higher losses.

Nifty PSU Bank closed 4.51 per cent lower while Nifty Realty plunged 4.14 per cent at closing.

Nifty Media was down 3.91 per cent. Nifty Auto and Nifty Oil & Gas were down 3.13 per cent and 3.35 per cent, respectively. Nifty Bank and Nifty Financial Services were down 2.23 per cent and 2.31 per cent, respectively. Nifty Consumer Durables was down 2.93 per cent while Nifty Healthcare Index was down 2.21 per cent.

Mid-cap, small-cap stocks suffer more

The sell-off extended to broader markets with broader indices remaining in the red.

Nifty Midcap 50 was down 2.96 per cent at closing while Nifty Smallcap 50 was down 3.45  per cent. The S&P BSE Midcap was down 2.62 per cent while the S&P BSE Smallcap was down 2.96 per cent.