The S&P BSE Midcap index was down
0.31 percent, while the S&P BSE Small-cap index closed with gains of more
than a percent, outperforming the benchmarks.
It was a Manic Monday on
D-Street as the Indian market slipped to a two-week low that saw S&P BSE
Sensex tank more than 600 points and the Nifty50 slipping below its crucial
support at 11,000.
The S&P BSE Sensex ended
667 points lower at 36,939 on August 3, while the Nifty50 closed with losses of
181 points to 10,891.
"Indian benchmark indices
closed in the negative with losses, following mixed global cues. As virus cases
continued to rise and with the uncertainty regarding rate actions by the RBI,
markets succumbed to the momentum slowdown visible in the last couple of
trading sessions," Vinod Nair, Head of Research at Geojit Financial
Services told Moneycontrol.
Financial stocks led the
losses. Though momentum slowed down, stock-specific action was still happening,
depending mainly on earnings results and commentary, he said.
“As long as the markets hold
the current range, these downturns could be short-lived and should be utilised
to accumulate quality stocks," Nair said.
Sectorally, action was visible
in consumer durables, healthcare, and metal stocks, while selling-pressure was
visible in Bankex, finance, and energy space.
The broader markets
outperformed the benchmarks. The S&P BSE Midcap index was down 0.31 percent
while the S&P BSE Smallcap index closed with gains of more than a percent.
Here is a list of factors that
could have weighed on markets:
Weak
global cues
The Indian market woke up to
muted global cues. World stocks began August cautiously as US lawmakers
struggled to agree on a new stimulus plan following a global surge of COVID-19
cases, a Reuters report said.
On July 31, Fitch Ratings cut
the outlook on the United States’ triple-A rating to negative from stable,
citing eroding credit strength and a ballooning deficit, said the report.
Contraction
in factory data
The slowdown fears are here to
stay as India’s factory slump deepened in July on renewed lockdown measures to
contain surging coronavirus cases.
The Nikkei Manufacturing
Purchasing Managers’ Index, compiled by IHS Markit, fell to 46.0 in July from
47.2 in June, below the 50-level separating growth from expansion for a fourth
straight month and marking its longest spell of contraction since March 2009,
said a Reuters report.
A further decline in new orders
and output signaled weakness in overall demand despite factories again cutting
their prices, leading firms to reduce their workforces for the fourth month in
a row, it said.
Financials
led the fall on D-Street
Financial stocks led the fall
on D-Street, with the NiftyBank registering a decline of more than 2 percent,
while the S&P BSE Bankex was the top loser among sectoral indices on the
BSE.
The fall was mainly led by
losses in RBL Bank, Kotak Bank, Axis Bank, HDFC Bank, ICICI Bank, and IndusInd
Bank.
This comes two days after
Finance Minister Nirmala Sitharaman said the government was working with the
Reserve Bank India (RBI) on the need for restructuring of loans to help
industry tide over the impact of COVID-19.
Also
Read: Wockhardt shares hit 10% upper circuit on COVID vaccines tie-up with UK govt
Sitharaman said the ministry
was working with RBI on the demand of the hospitality sector for extension of
the moratorium, or restructuring of loans.
The Bank Nifty continued its
weakness for the fourth consecutive session and broke below its 50-days EMA on
a closing basis, which was acting as key support for past two months.
It corrected by around 2,200
points from 23,200 to 21,000 zones in the past nine trading sessions and has
come close to its previous swing low of 21,000.
“The NiftyBank has been making
lower top-lower bottom formation and resistances are gradually shifting lower,”
Chandan Taparia of Motilal Oswal Financial Services Limited said.
“Till it holds below the 21,600
zone, weakness can be seen towards 20,500 and 20,250 zones while on the upside,
immediate hurdles are shifting to 21,600-21,800 zones,” he added.
Rising
coronavirus cases
India's count of known
coronavirus cases surpassed 18 lakh on August 3, mirroring the trend of a rapid
rise in infections in several parts of the globe.
The United States is in a new
phase of the novel coronavirus outbreak with infections “extraordinarily
widespread” in rural areas as well as cities, said a Reuters report, quoting
White House coronavirus experts.
The coronavirus, which first
appeared in China, has infected 4.6 million people in the United States and
killed more than 155,000 Americans, according to a Reuters tally.
The rise in cases remains to be
the biggest risk for equity markets in the second half of 2020, say experts.
“Elongated COVID-19 led lockdown and casualties is the biggest risk in second
half of 2020,” Deepak Jasani- Head of Retail Research at HDFC Securities told
Moneycontrol.
Atul Bhole, Senior Vice
President–Investments, DSP Investment Managers, said the worsening of the COVID
curve could derail the recovery process and less than expected uplift in
consumption post the initial pent-up demand was also a cause of concern.
Profit
booking at higher levels
After two straight months of
vertical gains in the benchmark indices, some bit of profit-taking was expected
in August after the Nifty50 and S&P BSE Sensex rallied more 7 percent in
the previous month.
Profit-taking was seen in
sectors that have run up in the recent past. “The market has shown over 7
percent upward move in July. The market has extended its gain for the fourth
consecutive month, forming a higher high,” Rajesh Palviya, Head - Technical and
Derivative Research, Axis Securities told Moneycontrol.
Comments
Post a Comment