Mumbai: The markets expressed great dis-appointment to the mega Rs. 20 lakh crore economic package announced by the government over the weekend. The market undertone was so pessimist, that for once it overlooked even positive overseas cues.
According to reports, market experts and economists have largely criticised the government stimulus measures as been inadequate to drive consumption or manufacturing activity. Further, the proposed move to stop fresh insolvency cases for a year with an aim to avoid a wave of bankruptcies from companies did not augur well for the struggling banking sector.
This morning, thanks to the positive overseas cues, the BSE Sensex opened 150-odd points higher at 31,248, and that was the only shining spot today. Soon enough, the BSE index nose-dived into the negative territory and traded with heavy losses throughout the day. The Sensex cracked below the 30,000-mark for the first time this month as it touched a low of 29,968. The Sensex finally ended with a loss of 1,069 points (3.4 per cent) at 30,029.
Among the Sensex 30 stocks, IndusInd Bank was the biggest loser, down 10 per cent at Rs. 377. UltraTech Cement, Axis Bank, HDFC, ICICI Bank, Maruti, Bajaj Finance, Bajaj Auto, SBI, Larsen & Toubro, HDFC Bank and Hero MotoCorp tumbled 6-8 per cent each. IT stocks, however, bucked the trend. TCS surged 2.7 per cent and Infosys was up 1.7 per cent.
Among sectoral indices, the BSE Bankex slumped 6.7 per cent. The Auto and Realty indices also plunged over 5 per cent each. The Consumer Durables, Metal, Oil & Gas and Power indices also slipped over 3 per cent each. On the positive front, the BSE IT index jumped 1.4 per cent.
The market breadth was extremely bearish, with more than three declining stocks for every single advancing share. Out of 2,479 stocks traded on the BSE today, 1,770 declined and 549 advanced. Further, 34 stocks registered a new 52-week high today, while 109 stocks recorded a fresh 52-week low.
With today’s sharp fall the Sensex has broken below its monthly Fibonacci S2 support (30,525) and is now within striking distance of its monthly Fibonacci S3 support at 29,770. Going ahead, the S3 level needs to be closely watched for signs of any trend reversal. In case, 29,770, does not hold then the trend could remain bearish for the remainder of the month, with strong resistance expected around 31,280 and 32,300-odd levels.
As per the daily Fibonacci charts, on Tuesday, the BSE Sensex may seek support around 29,540-29,390-29,240, while in case of an up move the BSE index may face resistance around 30,520-30,670-30,820.
The NSE Nifty dropped 3.4 per cent to 8,823 and in doing so has not only broken it’s trend line support around 8,980 but also ended below the lower-end of the Bollinger Band on the daily charts, which is a negative sign. The only silver lining for the markets is that the key ADX (Average Directional Index) is tepid, which means neither the bulls nor the bears are strong enough currently. Hence, a pull-back seems quite possible.
The bears may hold slight advantage as long as the Nifty sustains below 8,850-odd level. In case of a pull-back, the NSE index is expected to face strong resistance around 9,250-odd levels, where the 20-DMA (Daily Moving Average) and 50-DMA converge.
Among the other key momentum oscillators – the MACD (Moving Average Convergence Divergence) has given a negative divergence on the daily charts, while the Slow Stochastic and the DI (Directional Index) too continue to remain in favour of the bears. The 14-day RSI (Relative Strength Index) remains in neutral mode.
Disclaimer: The article is for information purpose only and does not advocate any buy or sell /recommendation.
