Sensex plunges 900 points on 6th straight day of sell-off

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Indian equities slid for the sixth straight session amid weak global cues and monthly expiry of derivatives contracts.

Geopolitical tensions in West Asia and elevated US Treasury yields at around 5 per cent cast a shadow on the global risk appetite. Mixed second quarter results, sustained selling from overseas investors, rising crude prices and a depreciating rupee weighed on sentiment.

Selling pressure

Selling pressure intensified on Thursday due to expiry-led volatility, prompting investors to stay cautious. The benchmark 50-share Nifty index slid below the psychological 19,000 mark to levels last seen in June, closing at 18,857, down 1.39 per cent. The Sensex slumped 900 points or 1.41 per cent to settle at 63,148.

M&M was the top Nifty loser, down 4 per cent, followed by Bajaj twins, UPL and Asian Paints, which slid more than 3 per cent. All sectoral indices ended in the red, with financials, automobiles, IT and metals taking the maximum brunt. Shares of fertilizer companies declined after the government slashed subsidies for the upcoming rabi season.

“Investors are worried about the simmering West Asia conflict, economic uncertainty and rate hike woes. Technically, a bearish candle on daily charts and weak intraday formation is indicating further weakness from the current levels,” said Shrikant Chouhan, Head of Equity Research (Retail), Kotak Securities.

Foreign portfolio investors yanked out ₹7,702 crore on Thursday, even as domestic institutions pumped in ₹6,558 crore, provisional data showed. FPIs have sold shares worth $1.7 billion in October, in addition to the $1.8 billion sold the previous month.

Corp results

Vinod Nair, Head of Research at Geojit Financial Services, said the domestic Q2 results so far were below expectations and that similar disappointments were seen in developed economies as well. He hinted at more earnings downgrades going forward as the economy slowed down due to geopolitical conflicts and elevated interest rates.

Asian stocks slid to 11-month lows, with Japan’s Nikkei 225 and South Korea’s Kospi indices slipping more than 2 per cent. Shanghai Composite was the only index to end in the green, up 0.5 per cent. European shares were trading deep in the red, hit by a rise in US Treasury yields, weak earnings reports, with an ECB meeting and the release of US GDP numbers to come later in the day. Poor corporate results in the US also weighed on the market mood.

Analysts believe that the weak sentiment for the Nifty is likely to continue till 18800-18725 levels and a relief rally is possible only if the psychological level of 19,000 is breached.

Siddhartha Khemka, Head – Retail Research, Motilal Oswal Financial Services, said: “Given the global uncertainties, there could be higher volatility in the near term, giving long-term investors an opportunity to accumulate quality stocks at lower levels. We suggest higher allocation towards large caps as valuations are comfortable along with steady growth prospects.”



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